Ahmed Ali Charles Hoskinson, co-founder of Input Output Global (IOHK) and the driving force behind the Cardano blockchain initiative, recently expressed his deep concerns in a video regarding the U.S. regulatory authority’s decision to classify the cryptocurrency Cardano as a security. His frustration stems from the contrasting treatment of Bitcoin, which has not been designated as a security, leading him to label the situation as a “disconcerting paradox” and highlighting the apparent preferential treatment given to what he calls “Team Orange.”
Hoskinson’s Exasperation Over ‘Team Orange’ Privileges
In a video clip shared by Altcoin Daily on a social media platform referred to as X, Charles Hoskinson passionately articulated his perspective on the classification of Cardano (ADA) as a security, drawing a comparison with Bitcoin (BTC) and other cryptocurrencies in the market. He questions the rationale behind this classification, emphasizing what he perceives as inconsistencies and inequities in the regulatory approach.
Within the video, Hoskinson raises concerns about the absence of an expectation of profit among dedicated Bitcoin supporters, colloquially known as the “Orange pill moon boys.” He criticizes the perceived decentralization of Bitcoin, pointing out that targeting a few key entities could potentially result in a 51% attack on the network due to the distribution of hashpower. He vehemently criticizes this oversight as a glaring and deeply concerning issue.
Following the release of the video by Altcoin Daily, users on platform X reacted to Hoskinson’s assertions. In a thread on X, Blockstream founder Adam Back responded and tagged Hoskinson. Back simplified the distinction, stating, “[Charles Hoskinson], it’s quite simple: Bitcoin did not conduct an Initial Coin Offering (ICO); most people initially perceived it as having no value; it was created through mining from scratch; it operates in a decentralized manner with no central authority, ICO fundraising ‘foundation,’ or incorporation, etc. Therefore, Cardano, Ethereum, and similar projects clearly fall under the Howey test, whereas Bitcoin is regarded as a commodity and not a security.”
In response to Back, Hoskinson clarified that Cardano did not undergo an ICO. Instead, he provided details of an airdrop and subsequent ADA trading 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.”
According to Cardano’s Genesis records, these ADA token vouchers were distributed through sales in Asia from October 2015 to early January 2017, facilitated by a Japanese company and totaling 108,844.5 BTC. The debate continued with Back countering Hoskinson’s explanation, suggesting that an airdrop, premine, and some market activity still qualify as an ICO. He also pointed to the reliance on a management team for profit expectations.
Hoskinson: ‘I’m Concluding That Team Orange Advocates Criminalizing Everything but Bitcoin’
Hoskinson refuted the notion that an airdrop equates to an Initial Coin Offering (ICO), citing even the SEC’s ambiguity on the matter. He cited the SEC’s settlement with EOS and Block.one as an example. Hoskinson emphasized that ADA was not publicly offered by a centralized entity, drawing a contrast with Ethereum’s ICO for Ether, which has not been classified as a security.
Expressing his frustration, Hoskinson criticized the Bitcoin community for branding non-Bitcoin projects as inferior or fraudulent. He condemned what he perceived as efforts by Bitcoin advocates to persuade U.S. authorities to outlaw cryptocurrencies other than Bitcoin. He also dismissed the argument that Bitcoin’s mining process was fundamentally different, noting that Satoshi Nakamoto, Bitcoin’s creator, initially had complete control over the network and remained anonymous due to legal uncertainties.
The Blockstream executive responded by drawing comparisons between Bitcoin, gold, and diamonds, arguing that none of these are securities. Despite claims that gold prices are influenced by sovereign entities and diamond prices by companies like De Beers, Back asserted that, like Bitcoin, they are commodities. He maintained that Ether, ADA, and similar cryptocurrencies are, in contrast, securities. Furthermore, he emphasized that these assets are “both unregistered and unregisterable securities too.”
What are your thoughts on the ongoing debate between Charles Hoskinson and Adam Back? Feel free to share your perspectives and opinions on this matter in the comments section below.
Table Of Contents
Frequently Asked Questions (FAQs) about Cryptocurrency Classification
What is the main issue in the debate between Charles Hoskinson and Adam Back?
The main issue in the debate is the classification of Cardano as a security by U.S. regulators and the contrasting treatment of Bitcoin in terms of security classification.
What is Charles Hoskinson’s perspective on Cardano’s classification?
Charles Hoskinson is frustrated and perplexed by the decision to classify Cardano as a security. He believes it is inconsistent with the treatment of Bitcoin and criticizes what he sees as unfair regulatory approaches.
What argument does Adam Back put forth in response to Hoskinson’s views?
Adam Back argues that Bitcoin is not a security because it did not conduct an Initial Coin Offering (ICO), was initially perceived as having no value, and operates in a decentralized manner with no central authority or fundraising foundation.
How does Hoskinson respond to the claim that Cardano had an ICO?
Hoskinson clarifies that Cardano did not have an ICO but rather involved a voucher sale of a different asset outside the United States, priced in Yen, settled in Bitcoin, and targeted Japanese citizens without any U.S. participants.
What does Hoskinson emphasize regarding ADA’s classification as a security?
Hoskinson emphasizes that ADA was not publicly offered by a centralized entity, distinguishing it from Ethereum’s ICO for Ether, which has not been classified as a security.
What broader issues are raised in the debate?
The debate extends to discussions about the Bitcoin community’s perception of non-Bitcoin projects, efforts to outlaw cryptocurrencies other than Bitcoin, and the nature of mining processes in the crypto space.
How does Adam Back compare Bitcoin to other assets like gold and diamonds?
Adam Back compares Bitcoin to gold and diamonds, arguing that all three are commodities and not securities, despite certain influences on their prices.
What is the significance of this debate in the cryptocurrency space?
This debate highlights the ongoing challenges and controversies surrounding the classification of cryptocurrencies by regulators and the implications for their legal status and treatment within the crypto industry.
More about Cryptocurrency Classification
- Cardano’s Charles Hoskinson Criticizes Cardano’s Security Classification
- Blockstream’s Adam Back Responds to Cardano Debate
- SEC’s Ambiguity on Airdrops and ICOs
- Comparison of Bitcoin, Gold, and Diamonds
- Cryptocurrency Regulation and Classification Issues
1 comment
ADA, BTC, SEC, OMG! So many acronyms! I jus’ wanna buy crypto, not read legalese!