In recent months, the former Ethereum advisor Steven Nerayoff has promoted allegations that Ethereum received preferential treatment from regulators, fueling a conspiracy theory known as ETHgate.
Claiming to have evidence of corruption that implicates Ethereum founder Vitalik Buterin, on Thursday, November 16, Neyaroff published a recording of a conversation the two men had in 2015. The recording is certainly interesting, but is there any substance to Nerayoff’s allegations?
According to Nerayoff, the recording in question originates from a meeting he held with Buterin after he received requests to assess Ethereum’s long-term viability and potential restructuring.
A qualified attorney who has founded and led several digital technology startups since 1998, Nerayoff’s advice to Buterin was stark: “Virtually everybody needs to go,” he told the Ethereum founder. The restructuring he proposed would have entailed replacing most of the project’s leaders, commissioning an independent audit of accounts, and establishing a new, for-profit entity funded by venture capital investments to direct Ethereum’s development.
Over the course of more than 3 hours, he proceeded to warn Buterin that Ethereum’s initial fundraising and subsequent distribution of ETH landed it on some shady legal ground. “I am fairly convinced that securities laws and these other laws have been tripped,” he remarked at one point.
While it proves he warned Buterin about potential legal trouble, the ETHgate recording isn’t quite the bombshell Nerayoff promised. Previously, he implied that he had evidence of a backroom deal with the Securities and Exchange Commission (SEC) deal that helped Ethereum skirt regulatory scrutiny.
In one post on X, he even suggested that Buterin and Joseph Lubin, another key contributor in Ethereum’s early days, were responsible for fraud that is “1000x bigger than SBF,” an accusation he has repeated on numerous occasions.
Commenting on the recorded conversation with Buterin, the former Ethereum advisor noted that it “isn’t directly related to the fraud but will illuminate a lot of what was really happening.” He has also hinted at a potential lawsuit, suggesting another reason for playing his cards close to his chest.
For now, Nerayoff’s claims remain unsubstantiated. After saying he had evidence that could prove Buterin broke the law, all he has demonstrated so far is that the two men disagreed on what Ethereum should look like.
While his supporters view him as an important whistleblower helping to expose corruption at Ethereum and US Federal agencies, critics have questioned his motives, often pointing to his previous arrest for criminal extortion to raise doubts about his character.
At the very least, Nerayoff’s latest disclosure sheds light on a rocky period of Ethereum’s development.
Charles Hoskinson, who had left Ethereum by 2015 after falling out with fellow co-founders, is often mentioned in the recording. Like Nerayoff, he disagreed with Buterin’s vision for Ethereum, and would ultimately go on to launch Cardano as a rival platform.
After all this time, however, Hoskinson appears to have moved on. He tends to make light of ETHgate, but in his assessment of Nerayoff’s recording, Hoskinson said it revealed an uncomfortable truth about how close Buterin and his allies came to not being able to finish what they started. “But they did, and the rest is history,” he emphasized.
Striking a conciliatory tone, he said “it’s a shame that things have been so profoundly and deeply personal for so long,” while steering clear of Nerayoff’s more bombastic rhetoric.
So what next for ETHgate? As someone involved with Ethereum at a high level during its early years, Steven Nerayoff’s endorsement has given the conspiracy theory a degree of credibility. Yet the whole thing often feels desperate.
At worst, the focus on speculation and absence of concrete evidence distracts from other concerns, such as the identity of Ethereum’s earliest backers, who could potentially still excerpt control over the network today.
Rather than being grounded in facts, ETHgate is mostly fueled by SEC haters and disgruntled XRP supporters, often peddling misinformation to further their agendas. That doesn’t mean the rumors and charges are true. But as Hoskinson cautioned: “Don’t believe just because somebody wrote a book or released a transcript that you now know everything.”