SEC Clears Zcash After Chaos ZEC Price Increases
The SEC has completed its review of the Zcash Foundation and has announced that it does not intend to recommend any enforcement action against the nonprofit or any other regulatory changes related to the matter.
The decision removes the legal violation that followed Zcash for more than two years.
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A two-year investigation is over
ZEC added to the news. The token traded up about 13% on the day to $440, with traders weighing on low regulatory risk.
However, the move comes after days of high-profile management turmoil in the low-cost ecosystem, which had earlier pushed the benchmark significantly lower.
The SEC targeted the Zcash Foundation in August 2023 when it filed a formal appeal under a broader investigation into “offerings of certain crypto assets.”
The agency sought information on whether Zcash-related funding, management or token distribution could fall within US securities laws.
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As with many crypto investigations at the time, the question focused on whether any part of the project resembled an unregistered securities offering. Zcash's privacy-focused design and its US-based base put it under more scrutiny.
Now, more than two years later, the SEC has closed the case without prompting any fees, penalties or compliance changes.
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Administrative violence is cheap
While the regulatory issue remains quiet, Zcash faced a new problem this month.
Last week, the entire core development team at Electric Coin Company (ECC) resigned following a public dispute with the Bootstrap Foundation, which oversees the management of Zcash.
He accused the ECC management board of making operational and good governance changes that made continued development impossible. They described the situation as a constructive drain and said that they will continue to use privacy technology outside of the current structure.
That news triggered heavy selling. ZEC has dropped more than 20% within days as investors fear a protocol leadership crash.
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Since then, Zcash stakeholders have worked to clarify that the blockchain itself is decentralized and functional.
Also, the team is setting up the network as a startup to scale. Independent developers, node operators and miners continue to operate the network.
Meanwhile, the SEC decision removes the biggest regulatory threat facing the project.
Together, these developments seem to have changed market sentiment.
