The Crypto community responded to the Ethereum Foundation’s investigative reports
The Ethereum Foundation, a non-profit organization at the heart of the Ethereum ecosystem, has found itself under scrutiny from both an anonymous “government authority” and the US Securities and Exchange Commission (SEC).
Reports from CoinDesk and Fortune have shed light on the developing situation, which has sparked widespread speculation in the crypto community.
TLDR
The Ethereum Foundation received a confidential request from an unnamed “government official.” Ethereum-related companies have received an SEC subpoena, suggesting an investigation into ETH's potential classification as a security. The SEC's focus appears to be on Ethereum's transition to a proof-of-concept agreement in September 2022. The investigation raises concerns among Ethereum ETF applicants and has implications for the broader crypto industry. The price of ETH fell after the reports but has since recovered.
CoinDesk reports that the Ethereum Foundation has removed a footer from its website, which previously stated that the organization had never contacted any agency in a way that required anonymity.
The removal of this statement, along with the website's security canary, suggests the foundation received a confidential request from a government agency.
Following CoinDesk's report, Fortune reported that the SEC began investigating the Ethereum Foundation in September 2022 after the Ethereum network transitioned to a proof-of-consensus mechanism. The SEC's focus is that this transition could buy ETH from a security, subject to additional regulatory scrutiny.
The SEC investigation is said to include sending subpoenas to US companies linked to the Ethereum ecosystem. These developments have raised concerns among investors for Ethereum ETFs, as regulatory uncertainty surrounding ETH could affect the approval process.
The crypto community had mixed reactions to the news, with some downplaying the importance of the investigations and others seeing it as a continuation of the SEC's aggressive stance toward the industry.
The price of ETH initially fell nearly 6% following the reports but has since recovered.
The heart of the matter is the complex legal status of Ethereum as a commodity or security. SEC Chairman Gary Gensler previously said that US securities laws are more applicable to proof-of-stake blockchains as they allow holders to participate in management votes and profit from the tokens they hold.
As the situation develops, the crypto community will closely monitor the SEC's actions and their impact on Ethereum's future developments and the broader cryptocurrency ecosystem.
The investigation comes at a critical moment, with major financial institutions scrutinizing the authorization of Ethereum ETFs and the regulatory framework that governs digital assets.
