Hoskinson Criticizes Exemption of Bitcoin as Security

Hoskinson Criticizes Exemption of Bitcoin as Security

In a recent video clip, Charles Hoskinson, co-founder of Input Output Global and the Cardano blockchain initiative, expressed his frustration over the U.S. regulator’s decision to classify cardano as a security while exempting bitcoin from the same classification. Hoskinson criticized the perceived inconsistencies and unfair treatment in the regulatory approach, mocking the situation as a “pathetic joke” and referring to bitcoin supporters as the “Orange pill moon boys.” The debate continued with Blockstream founder Adam Back simplifying the distinction between the two cryptocurrencies, stating that bitcoin did not conduct an ICO and is decentralized, while Cardano and Ethereum clearly pass the Howey test. Hoskinson clarifies that Cardano didn’t have an ICO, but rather conducted an airdrop and subsequent trading of ADA tokens. The article highlights the ongoing debate between Hoskinson and Back regarding the security classification of different cryptocurrencies.

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Hoskinson Shows Frustration Over ‘Team Orange’ Getting a Pass

In a video clip shared by Altcoin Daily on a social media platform referred to as X, Charles Hoskinson passionately discussed his views on cardano’s (ADA) classification as a security, contrasting it with bitcoin (BTC) and others in the crypto space. He questions the logic, highlighting what he perceives as inconsistencies and unfair treatment in the regulatory approach.

Hoskinson, in the video, questions the absence of expectation of profit among fervent bitcoin supporters, known as the “Orange pill moon boys.” He criticizes the perceived decentralization of Bitcoin, noting that subpoenaing or targeting a few entities could potentially lead to a 51% attack on the network due to the nature of its hashpower distribution. He lambasts this oversight as a glaring, “pathetic f***ing joke.”

Following the video’s release by Altcoin Daily, users of platform X reacted to Hoskinson’s assertions. In a thread on X, Blockstream founder Adam Back responded, tagging Hoskinson. Back simplified the distinction, stating, “[Charles Hoskinson] it’s very simple: Bitcoin did not do an ICO, most people thought it had no value, it was mined from zero, it is decentralized, there is no CEO, ICO warchested ‘foundation,’ incorporation etc. so Cardano, ETH, etc clearly pass Howey, Bitcoin is a commodity and does not.”

Responding to Back, Hoskinson clarified that Cardano didn’t have an ICO. Instead, he detailed an airdrop and subsequent trading of ADA by a diverse group of individuals who also used the platform for various projects.

He further elaborated:

“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 U.S. participant does not constitute an ICO of ADA.”

As per Cardano’s Genesis records, these ADA token vouchers were distributed through sales in Asia from October 2015 to early January 2017. A Japanese company facilitated these sales, which garnered 108,844.5 BTC. The debate continued with Back countering Hoskinson’s explanation, suggesting that an airdrop, premine, and some market activity still classify as an ICO. He also pointed to the reliance on a management team for profit expectations.

Hoskinson Questions Regulatory Inconsistencies

Hoskinson sees regulatory inconsistencies when it comes to Cardano’s security classification. He questions why Cardano has been labeled as a security, while other cryptocurrencies like Bitcoin are exempt from such categorization.

This discrepancy raises concerns about the fairness and transparency of the regulatory approach. Hoskinson believes that there should be a clear and consistent framework for determining the classification of cryptocurrencies to ensure a level playing field for all projects.

By contrasting Cardano’s treatment with that of Bitcoin, Hoskinson aims to shed light on what he perceives as arbitrary decision-making by regulators. He believes that a more comprehensive and well-defined set of criteria is needed to assess the security status of cryptocurrencies.

Hoskinson Criticizes Bitcoin’s Perceived Decentralization

Hoskinson highlights what he perceives as a potential weakness in Bitcoin’s decentralization. He argues that Bitcoin’s hashpower distribution makes it susceptible to a 51% attack if a few entities are targeted or subpoenaed. According to him, this vulnerability compromises Bitcoin’s status as a truly decentralized network.

Hoskinson criticizes the oversight in Bitcoin’s regulatory approach, which he considers a “pathetic f***ing joke.” He suggests that the perceived decentralization of Bitcoin is not as robust as it is often portrayed, as the concentration of hashpower in the hands of a few can be exploited to control the network.

By questioning Bitcoin’s decentralization, Hoskinson aims to challenge the notion that Bitcoin should be exempt from security classification while other cryptocurrencies like Cardano are categorized as securities. He believes that a more nuanced understanding of decentralization is necessary to ensure fair and consistent regulatory treatment.

Back Responds to Hoskinson’s Assertions

In response to Hoskinson’s assertions, Adam Back simplifies the distinction between Bitcoin and Cardano’s classification. He argues that Bitcoin did not have an initial coin offering (ICO), unlike Cardano and other cryptocurrencies. Back points out that most people thought Bitcoin had no value initially and it was mined from zero. He emphasizes that Bitcoin is decentralized, with no CEO or ICO warchest. In his view, these factors make Bitcoin a commodity rather than a security.

Back’s response suggests that the different treatment of Cardano and Bitcoin is based on their distinct characteristics and origins. He believes that Cardano and Ethereum, which had ICOs and centralized entities involved, fall under the Howey test for securities. On the other hand, Bitcoin’s decentralized nature and absence of an ICO exempt it from such classification.

By simplifying the distinction, Back aims to provide a clear explanation for why Bitcoin is exempt from security classification while other cryptocurrencies are not.

Hoskinson Clarifies Cardano’s ICO Status

Hoskinson aims to clarify Cardano’s initial coin offering (ICO) status, responding to the assertion that Cardano had an ICO similar to other cryptocurrencies. He explains that Cardano didn’t have a traditional ICO but conducted a voucher sale of a different asset outside of the United States. The voucher sale was priced in Yen, settled in Bitcoin, and explained in Japanese to Japanese citizens. It did not involve any U.S. participants.

Hoskinson emphasizes that this voucher sale does not meet the criteria for an ICO, as it was conducted in a different currency and targeted a specific group of individuals in Japan. He argues that the lack of direct U.S. involvement and the nature of the sale differentiate it from the ICOs of other cryptocurrencies.

By clarifying Cardano’s ICO status, Hoskinson aims to address the misconception that Cardano had a traditional ICO like Ethereum and other cryptocurrencies.

Back Counters Hoskinson’s Explanation

In response to Hoskinson’s clarification of Cardano’s ICO status, Adam Back counters with a different perspective. Back suggests that an airdrop, premine, and subsequent market activity still classify as an initial coin offering (ICO). He also points out the reliance on a management team for profit expectations in the case of Cardano.

Back argues that even though Cardano’s voucher sale may have been conducted outside the United States and without U.S. participants, the presence of an airdrop and market activity aligns it with the characteristics of an ICO. He emphasizes that profit expectations and reliance on a management team are crucial factors in determining the classification of a cryptocurrency.

By countering Hoskinson’s explanation, Back aims to provide an alternative viewpoint on Cardano’s ICO status and reinforce his assertion that Cardano should be classified as a security.

Hoskinson Refutes Airdrop Equals ICO Claim

Hoskinson disagrees with the assertion that an airdrop is equivalent to an initial coin offering (ICO). He cites the Securities and Exchange Commission’s (SEC) ambiguity on the matter as evidence for his argument.

Hoskinson points to the SEC’s settlement with EOS and Block.one as an example. Despite the airdrop of EOS tokens, the SEC did not classify the tokens as securities. This precedent supports Hoskinson’s claim that an airdrop does not automatically equate to an ICO and that the classification depends on various factors.

Hoskinson also highlights the difference between Cardano’s distribution model and Ethereum’s ICO for ether. He argues that the lack of a centralized entity conducting a public offering distinguishes Cardano from Ethereum and undermines the argument that Cardano should be classified as a security.

By refuting the claim that an airdrop equals an ICO, Hoskinson challenges the notion that Cardano should be treated as a security based solely on its distribution method.

Hoskinson Contrasts ADA with Other Cryptocurrencies

Hoskinson contrasts the classification of ADA with other cryptocurrencies, specifically drawing attention to the difference between ADA and Ethereum’s ICO status.

He emphasizes that Ethereum had a traditional ICO, during which the tokens were publicly offered and a centralized entity was involved. In contrast, ADA’s distribution model did not involve a centralized entity conducting a public offering. Hoskinson argues that these distinctions make ADA fundamentally different from Ethereum in terms of security classification.

By contrasting ADA with other cryptocurrencies, Hoskinson aims to highlight the unique characteristics of ADA and the need for a nuanced approach to security classification in the cryptocurrency space.

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Hoskinson Condemns Bitcoin Advocates’ Efforts

Hoskinson condemns the efforts of Bitcoin advocates to label non-Bitcoin projects as inferior or fraudulent. He expresses frustration with what he perceives as lobbying by Bitcoin supporters to push U.S. authorities to outlaw cryptocurrencies other than Bitcoin.

Hoskinson criticizes the argument that Bitcoin’s mining process is fundamentally different from the issuance of other cryptocurrencies. He points out that Satoshi Nakamoto, Bitcoin’s creator, initially had complete control over the network and remained anonymous due to legal uncertainties. Hoskinson argues that this undermines the claim that Bitcoin is fundamentally different from other cryptocurrencies and should be exempt from security classification.

By condemning the efforts of Bitcoin advocates, Hoskinson aims to challenge the idea that Bitcoin is inherently superior to other cryptocurrencies and should dictate the regulatory landscape.

Back Compares Bitcoin with Gold and Diamonds

In response to Hoskinson’s criticism of Bitcoin’s perceived superiority, Back compares Bitcoin with gold and diamonds. He argues that, like Bitcoin, gold and diamonds are commodities and not securities.

Back dismisses the notion that sovereign entities and companies like Debeers influence the prices of gold and diamonds, highlighting their status as commodities. He asserts that Bitcoin shares this characteristic and should be treated as such. In contrast, he argues that cryptocurrencies like Ether and ADA are securities due to their registration requirements and their dependence on management teams.

By comparing Bitcoin with gold and diamonds, Back aims to highlight the commodity-like nature of Bitcoin and differentiate it from other cryptocurrencies classified as securities.

Overall, the debate between Charles Hoskinson and Adam Back revolves around the classification of cryptocurrencies and the criteria used to determine their status as securities or commodities. Hoskinson expresses frustration over what he perceives as inconsistencies and unfair treatment in the regulatory approach, while Back provides his perspective on the classification based on specific characteristics and origins of cryptocurrencies. Both individuals emphasize the need for clarity and consistency in the regulatory landscape to ensure fair treatment of all projects.

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