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Ethereum Foundation Under Investigation as SEC Eyes Security Classification

Ethereum's promising year, highlighted by soaring ETH prices and significant upgrades, is now marred by an investigation into the Ethereum Foundation and scrutiny from the SEC.

Image Source: Vitalik Buterin (@MilkRoadImages)
  • Ethereum has been on an upward trend this year, marked by an increase in ETH prices, the Dencun upgrade, and speculation about a potential spot Ethereum ETF.
  • The Ethereum Foundation, however, is reportedly under investigation by a state authority, a development shared through a GitHub commit on February 26, 2024.
  • Amidst the controversy, it's reported that the U.S. SEC is actively seeking to classify Ethereum as a security.

Ethereum has been experiencing a positive streak this year, with a surge in ETH prices, the Dencun EIP 4844 upgrade, and rumors swirling around a possible spot Ethereum ETF. 

However, the tides have shifted somewhat for the Swiss-based nonprofit. It's reported that the Ethereum Foundation is now facing an investigation by a State Authority, according to an update disclosed through a GitHub commit dated February 26, 2024

“This commit removes a section of the footer as we have received a voluntary enquiry from a state authority that included a requirement for confidentiality,” reads the commit's description. 

Along with the footer, the website's warrant canary was also removed. A warrant canary, often a specific text or a visual symbol (such as a colorful bird for the Ethereum Foundation), is used by organizations on their websites to signal they haven't received a secret government subpoena.

The removal of this canary implies the organization might have been served with such a request, indirectly indicating this without direct acknowledgment.

“The Ethereum Foundation (Stiftung Ethereum) has never been contacted by any agency anywhere in the world in a way which requires that contact not to be disclosed. Stiftung Ethereum will publicly disclose any sort of inquiry from government agencies that falls outside the scope of regular business operations,” the Ethereum Foundation's website previously stated.

While Ethereum is already under controversy, a report suggests that the U.S. Securities and Exchange Commission (SEC) is reportedly pursuing a legal initiative to categorize Ethereum as a security.

Edited by Harshajit Sarmah