In a video address, Charles Hoskinson casts a spotlight on the advance of traditional financial mechanisms into the realm of cryptocurrency, warning that the essence of digital currencies is at stake. Charles Hoskinson Warns of Crypto’s Creeping Centralization In a recent video titled “Legacy is Eating Crypto,” Charles Hoskinson, the co-founder of Ethereum and Cardano, […]
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In a Nov. 22 YouTube video, Cardano founder Charles Hoskinson reflected on the news that Binance CEO Changpeng “CZ” Zhao had stepped down from the exchange. Hoskinson claimed that the event represented “the end of an era.” He argued that entrepreneurs will need to comply with regulations or else develop completely permissionless protocols that can’t be regulated.
The End of an Era https://t.co/d3AcHWu66C
— Charles Hoskinson (@IOHK_Charles) November 22, 2023
In the video, Hoskinson claimed that CZ was “part of a class of entrepreneurs in the cryptocurrency space who really epitomized the move fast, grow and innovate side of things.” In the early days of crypto, Bitcoin (BTC) traders used spreadsheets to make trades and sent funds to buy the cryptocurrency via PayPal, Hoskinson said. This period represented the “first wave” of innovation in the space. CZ and Binance came in the “second wave” in 2017 and became a “Leviathan in our industry.”
“He [CZ] was one of the greatest entrepreneurs of our time,” Hoskinson stated, adding that “trillions of dollars of assets flowed through his exchange.”
However, Hoskinson warned that the world is changing and that entrepreneurs will no longer be able to get by using centralized systems while simultaneously not complying with regulations. This is because “the United States has a financial regime that basically has been weaponized,” and this regime will not allow entrepreneurs to open up markets that let “the enemies of America to basically trade and do things.” Hoskinson claimed that the world is becoming “multipolar,” leading many countries to reject this U.S.-led system. In his view, this is leaving crypto “caught in the middle,” resulting in incidents like the Binance plea deal.
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He suggested that the U.S. government will likely continue its efforts to regulate crypto services, including eventually “hitting” or trying to put restrictions on external wallets. However, he also claimed that innovators “still have a lot of power” that can be used to foster freedom while also allaying some of the concerns of regulators. Hoskinson suggested that Midnight, a network aimed at facilitating transactions based on algorithmic law, may provide part of the solution to the problem of government regulation of crypto.
On Nov. 21, the U.S. Justice Department announced that CZ and Binance had agreed to a plea deal connected to criminal charges of violating the U.S. Bank Secrecy Act. On the same day, CZ announced that he was stepping down as CEO of the exchange, and he posted a bond of $15 million to a United States district court to be released from custody. CZ’s sentencing hearing is scheduled for Feb. 23, 2024. Hoskinson referred to CZ as “a friend” and “a good man” in the video.
Ripple chief technology officer David Schwartz has countered the Cardano founder’s comments about possible motives behind the United States regulators’ determination that Ether (ETH) is not a security.
Cardano founder Charles Hoskinson addressed the much-debated ETHgate theory in an AMA session on Oct. 8, arguing that the government’s actions were not about corruption.
ETHgate is a conspiracy theory alleging that Ethereum received a free pass from U.S. regulators, particularly the U.S. Securities and Exchange Commission (SEC), which has been reiterating its stance that ETH isn’t a security for years.
Despite SEC director William Hinman defining Ether as not a security in 2018, U.S. regulators have been struggling to establish the status of other coins, including XRP (XRP), which has created significant impediments to their adoption.
According to Hoskinson, Hinman’s speech drafts on the regulatory status of Ethereum — which were released in June 2023 — do not prove corruption but favoritism.
“None of that activity presupposes corruption, just favoritism,” Hoskinson argued in the AMA, adding that “this is how the internet works, and it can’t be fixed now.”
The Cardano founder emphasized that there has been no evidence proving anything apart from favoritism by the SEC. “What evidence do you have of that? Where are the emails? Where are the meetings?” Hoskinson asked. He also argued that XRP serves different customers, doesn’t even have smart contracts and has an entirely different business model. He added:
“Doesn’t that dilute your entire goal of making Ethereum not a security to also do that? Are you so scared of XRP that’s going to happen? You really believe that? If you do, you’re a crazy person in my book.”
Hoskinson’s fresh ETHgate-related remarks have quickly triggered a response from the XRP community, particularly executives like XRP chief technology Schwartz. The XRP community specifically clashed with Hoskinson over the definition of corruption.
“I would argue that a government actor showing favoritism aligned with the personal interests of themselves and their friends is corruption,” Schwartz wrote on X (formerly Twitter) on Oct. 12.
“So saying word ‘corruption’ in much polite way is ‘favoritism’,” one commenter stated on X.
Related: Sam Bankman-Fried just like Bernie Madoff, Cardano founder says
Some community members also alleged that Hoskinson’s questions about ETHgate evidence might be related to the fact that he allegedly has a lot to hide about his early days in Ethereum.
Apart from his role at Cardano, Hoskinson is also one of the eight Ethereum co-founders alongside Vitalik Buterin and even briefly held the position of Ethereum’s CEO between 2013 and 2014. Following a public fall-out between the co-founders, Hoskinson left Ethereum in 2014 to subsequently launch Cardano.
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Cardano (ADA) co-founder Charles Hoskinson has refuted claims that Hydra, the layer 2 scaling solution for the Cardano blockchain, has been unsuccessful.
In an Oct. 5 video on social media platform X (formerly Twitter), Hoskinson revealed how Hydra has pivoted during the last three years and that measuring the network’s activity by transactions per second (TPS) alone might be misleading.
According to him, a single Cardano transaction can encompass multiple outputs, citing one instance where a block contained 384 outputs in just one transaction. He said:
“Cardano is not a TPS system. It’s a transaction-per-transaction system, and each of these outputs can signify more intricate elements such as scripts and proofs, beyond mere raw value transfers.”
Hoskinson further elaborated that Hydra has developed middleware for developers to build incorporates applications (dApps) for the blockchain network chain. This, Hoskinson explained, aligns with Cardano’s broader plan of supporting on-chain and off-chain applications like NFTs and decentralized exchanges (DEXs).
He said:
“So what happened over a three-year period is that Hydra pivoted a little bit and it pivoted into, let’s build some middleware that is going to be really easy for you as a developer to plug into your application work with Plutus to help get a lot of that complex logic that should not run on the main network but run it in a different network.”
Despite recent concerns, decentralized finance (DeFi) activity on Cardano continues to thrive.
According to data from DeFiLlama, the total value of assets locked (TVL) on Cardano has surged by over $10 million this month to $162.1 million as of press time. This growth mirrors the uptrend in DeFi activity on the network throughout the year as more traders embrace decentralized applications built on the blockchain.
It’s worth noting that the current TVL is still significantly below the all-time high of $326 million achieved last year.
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