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The Ethereum Foundation, a Swiss nonprofit at the heart of the Ethereum ecosystem, is currently under investigation by unnamed “state authorities,” according to a recent update to the group's GitHub repository. However, further details about the scope of the investigation and the reasons behind it have not been disclosed.
a It was recorded in the Ethereum Foundation's repository on February 26, 2024, revealing that the organization had undergone a voluntary investigation “by state authorities” that included confidentiality requirements. The issue was first raised by a research report conducted by crypto media platform CoinDesk.
The CoinDesk report cites a lawyer familiar with the situation, who speculates that Swiss regulators may have requested documents from the Ethereum Foundation. The lawyer also added to the speculation by saying the request in question may indicate cooperation between the designated entity, ostensibly the Swiss government, and the U.S. Securities and Exchange Commission (SEC).
“I also think it’s fair to say that the Ethereum Foundation is not the only organization seeking information,” the lawyer said, adding that other overseas organizations are also subject to similar scrutiny based on written requests. suggested that it was possible.
The study comes at a time of significant technological change for Ethereum, the second-largest blockchain by market capitalization. Following its initial coin offering in 2015, Ethereum recently implemented the Dencun upgrade, which is designed to reduce transaction costs for users of Ethereum-based Layer 2 platforms.
On the regulatory side, the SEC is currently evaluating multiple applications for Ether ETFs, with the final deadline for some applications approaching May 23rd. But analysts following the process have expressed skepticism about the likelihood of approval, citing a lack of involvement. between the applicant and the SEC official.
“The Ethereum Foundation (Stiftung Ethereum) has never been contacted by any institution in the world in a manner that required it to keep its contact information private. We publicly disclose any type of investigation from outside government agencies,” the Ethereum Foundation website states.
This statement was a warrant canary and was removed from the website at the same time as the aforementioned GitHub commit.
By definition, a warrant canary is a form of text or visual warning that a company posts on its website to indicate that the company is not receiving a confidential subpoena or document request from the government. Canary's removal suggests that the Ethereum Foundation may have received such requests without explicitly stating them.
The SEC recently requested public comment on proof-of-stake, the consensus algorithm used by Ethereum and other blockchains.
Update: According to a Fortune report, the SEC is pursuing a “vigorous legal campaign” to classify Ethereum as a security, confirming its investigation and ties to the U.S. government.
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