Cardano founder Charles Hoskinson recently criticized the SEC’s approach to regulating cryptocurrencies, accusing the agency of giving Bitcoin a “complete pass” while subjecting other crypto assets like Cardano’s ADA token to much harsher scrutiny.
In a fiery livestream , Hoskinson called the differential treatment an “absolutely pathetic joke,” demanding the SEC explain why Bitcoin is viewed as sufficiently decentralized while cryptos like ADA are labeled securities. “Explain it to me [the difference between Bitcoin and other cryptocurrencies] like I am five years old. Run the Howey test!”
“If you subpoena and attack about three different entities, you could perform a 51% attack on Bitcoin because that’s the way the hash power works,” Hoskinson said. “But it’s decentralized, apparently.”
The Cardano founder argued Bitcoin is not as decentralized as commonly believed since controlling over half the network’s hash rate would only require coercion of a few large mining pools.
Hoskinson also rebutted claims that Cardano had an ICO (Initial Coin Offering) token sale, which could justify stricter regulatory oversight.
“There was an airdrop onto a distribution, and then thousands of people who never met each other traded Ada on exchanges and used Cardano for their projects,” he stated.
“A voucher sale of a different asset outside of the United States, priced in Yen, settled in Bitcoin, explained in Japanese to Japanese citizens, and without a single US participant does not constitute an ICO of Ada.”
ICOs are controversial in the context of whether or not cryptocurrencies like ADA and Bitcoin are securities. Regulators are more likely to view a cryptocurrency that had an ICO as a security due to their shared characteristics, including the expectation of profit and the fact that an ICO could be construed as an investment contract.
The debate about which cryptocurrency is a security is a live one for Hoskinson and Cardano. ADA has repeatedly been mentioned as a “crypto asset security” in SEC documents. Most recently in a case involving the cryptocurrency exchange, Kraken.
In the end, Hoskinson attributed the SEC’s uneven treatment to pure favoritism, sarcastically praising Bitcoin’s “orange pill moonboys” for receiving preferential treatment from regulators.
“It would be funny if not for the fact that hundreds of millions of dollars of legal fees have been exhausted in this pyrrhic war that’s being fought on the industry,” he said.
He also predicted the SEC would lose case after case while the industry continued growing before the regulator’s attack finally ended – without apology or recompense.
He vowed that the industry would continue fighting unwinnable court battles until the SEC’s overreach was finally reined in.
Hoskinson went on to argue that the entire reason cryptocurrencies were created was to “reestablish the social contract” in the face of a “horrifically broken” system where regulators like the SEC waste hundreds of millions harassing the industry while remaining “unaccountable” themselves.
The Cardano founder praised libertarian lawmakers as the only people improving the situation by “unraveling the government” through cryptos that provide an alternative to legacy finance.
He also had kind words for Argentina’s new anarcho-capitalist President, Javier Milei. “Somebody who says the government is the problem and not the solution to the problem… I like that guy.”
Hoskinson also spoke enthusiastically about bringing Milei into the pro-blockchain movement, seeing the fiery politician as somewhat of a kindred spirit. “We’re going to get there, and I think Argentina has a chance to lead the world.”