Written by: Kaori, BlockBeats

Whether Ethereum is becoming more and more centralized is becoming a hot topic in the crypto community. Vitalik said in May last year that any liquidity staking pool should not exceed 15%, but now Lido, Coinbase and Binance account for more than 85% of the staking, and the Ethereum Foundation also admitted that Ethereum has "corporatization, centralization and systemic threats".

Related reading: "Interpreting the Consensys paper: Is Ethereum becoming increasingly centralized? "

The community's doubts are growing, and some people call Vitalik a dictator. Recently, some active speeches in the crypto community have even questioned Vitalik and other Ethereum founders for improper operations and bribery of SEC executives during the Ethereum ICO.

On November 2, under a tweet by crypto KOL Tiffany Fong about the SBF trial, former Ethereum consultant Steven Nerayoff commented, "It is obvious that Ethereum is the elephant in the room, even overshadowing the FTX case. Joe Lubin and Vitalik Buterin have always been the front line for corrupt officials at the highest levels of federal agencies, such as Clayton (former SEC Chairman), Gensler (SEC Chairman), etc."

Subsequently, the crypto media Bitcoinist published an article titled "Ethereum Insider Explodes a Bombshell: ETH Founder's Fraud is Worse than FTX Fraud" which attracted the attention of the community.

Nerayoff retweeted the article and said, "What's interesting is that I haven't talked to any reporters, but they think I wrote these articles. This article doesn't say that I don't have evidence, but that I haven't revealed it yet. If they think I don't have it, they won't say that. Although I have revealed a lot to those who pay attention."

In addition to these latest allegations, Nerayoff also tweeted claimed that someone in Ethereum concealed the true number of Ethereum ICO buyers, and "whales can cover up their large positions during the ICO."

Steven Nerayoff is in constant dispute, and his identity as an early contributor to Ethereum is in doubt

Steven Nerayoff is the founder and CEO of Alchemist. According to Linkedin information, Nerayoff has served as a consultant or investor in multiple projects, including Ethereum, tZERO, Polymath, Casper Labs, etc. He also claimed that during the Ethereum crowdfunding, he invented the "Utility Token" and ICO (which later evolved into IEO and IDO), and at tZERO, Steven designed the Security Token Offering (STO) for the first regulated security token (TZROP).

But a 2019 CoinDesk article reporting on Steven Nerayoff’s alleged extortion charges article mentioned that as of March 1, 2018, Nerayoff was a member of the advisory board of tZERO, a security token trading platform under retail giant OverStock, and a 2017 OverStock press release described him as “the architect of the Ethereum ICO.”

According to CoinDesk, early Ethereum staff said he was indeed involved and was also involved in the conception of Gas, but those descriptions may be a bit exaggerated and far from the driving force implied by his resume. A tZero spokesperson said tZero also has no relationship with Nerayoff and his company Alchemist. Alchemist was previously a paid consultant for the issuance of tZERO tokens, but tZERO has terminated the consulting relationship.

The fraud charges faced by Steven Nerayoff at the time were that he planned to extort a US startup that Nerayoff had been hired to guide the company's ICO in 2017. The accusation is that he and his employee Michael Hlady demanded $4.45 million from the company and would face up to 20 years in prison if convicted.

In May this year, a New York judge dismissed the fraud charges against Nerayoff, and court documents stated that they had obtained important evidence of innocence and "could not prove the allegations in the indictment beyond a reasonable doubt", thus ending the three-and-a-half-year legal battle.

However, Steven Nerayoff's dispute is not over. In September, Nerayoff claimed that Vitalik Buterin and his father Dmitry Buterin jointly accused him of extorting Ethereum ICO to damage his reputation. "This is a coordinated and carefully planned character attack by father and son to make me their scapegoat." Nerayoff also claimed that Virgil Griffith, a senior researcher and developer at the Ethereum Foundation, was abandoned by Vitalik after being "convicted of helping North Korea evade sanctions."

A few months have passed, and the community has not seen any substantive accusations from Steven Nerayoff. Nerayoff even said in a recent tweet that Twitter has restricted his traffic (banned & tags), "Looking at the early posts in late September and early October, the views were hundreds of thousands to millions, but now only a few thousand?!"

Conspiracy theory? What is ETHGate?

And another keyword is also flooding Nerayoff's comments section - ETHGate.

ETHGate supporters claim that the Ethereum Foundation and ConsenSys have established close relationships with key figures within institutions such as the SEC and JPMorgan Chase, thereby ensuring a favorable regulatory environment for Ethereum.

The reason for this entry is that the SEC classified Ethereum as a non-security while giving XRP and other competitors a harsher treatment.

Related reading: "Another heavy punch to the crypto giant? Counting the grievances and entanglements between the US SEC and encryption》

In the SEC v. Ripple case, Ripple's lawyers seized on a fatal weakness of the SEC-Bill Hinman, former director of the SEC's Financial Division, said in a speech in 2018 that ETH should not be considered a security. However, before making this ruling, the SEC chose not to disclose Hinman's materials, insisting on their confidential nature.

In addition, ETHGate supporters also believe that Ethereum co-founder and ConsenSys founder Joseph Lubin has established an insider connection between Ethereum and the SEC.

Within two months of Jay Clayton's appointment as SEC chairman, Lubin hired Patrick Berarducci from Sullivan & Cromwell law firm, where Jay Clayton was a partner before becoming SEC chairman. The community believes that this may provide Ethereum with an insider, or at least to get closer to the SEC.

Those who support ETHGate also pin their hopes on Steven Nerayoff, believing that he has more inside information.

Are Bitcoin bulls also involved in this Ethereum farce?

Patrick Byrne, former CEO of OverStock and Bitcoin advocate, also retweeted the news saying "Pay close attention to this story and you will see its relationship with me." Patrick Byrne resigned as CEO of OverStock in August 2019 because he admitted to participating in the FBI's investigation into whether Russia influenced the 2016 US presidential election. In January 2014, Overstock became the world's first major retailer to accept Bitcoin payments.

Some media even said that because Ethereum bulls are more optimistic than Bitcoin in the crypto market, Ethereum maximalists claim that Ethereum can surpass Bitcoin at any time, so Bitcoin extremists panic about Ethereum's bullishness and make fraud accusations.

But in the comment area of these questioning and accusatory tweets, most community users are on the sidelines. Their general voice is that Nerayoff did not provide substantial evidence, and speculation and catching wind and shadows cannot affect the status of Ethereum. "The title of this article is shocking, but there is actually zero content. What are these accusations? What evidence do you have to support it? How can it be bigger than FTX?"

Is there really any improper fraud and bribery of SEC executives in the Ethereum ICO? Steven Nerayoff said he would give an answer soon, but the reply he gave was "My goal is to make everything public as much as I can, and everyone can decide for themselves. I created another platform that cannot be censored, so I will publish here (Twitter) and there (new platform)."

How did the incident finally develop? BlockBeats will continue to follow up.

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