March 21, 2024

US State Authority Launches Inquiry into Ethereum Foundation's Operations

Recent upgrades within the Ethereum ecosystem and the anticipation surrounding a potential ether ETF coincide with the initiation of a secretive inquiry by a US state authority.

Reports have surfaced indicating that a US state authority, potentially the Securities and Exchange Commission (SEC), has initiated a vigorous legal scrutiny aimed at classifying ether, the cryptocurrency fundamental to Ethereum, as a security.

This development represents a significant setback for the cryptocurrency sphere, especially amidst hopes within the industry for the SEC's approval of ether ETF applications, particularly following the greenlighting of several bitcoin ETFs earlier in the year.

The inquiry into ether extends to compelling companies to furnish any documents and financial records associated with their engagements with the Ethereum Foundation. Tasked with overseeing the management and development of the Ethereum blockchain, the Ethereum Foundation is a non-profit entity.

Insiders from companies recently served with subpoena requests indicate that the state authority's investigation into the Switzerland-based Ethereum Foundation commenced shortly after the blockchain transitioned to a new governance model termed 'proof-of-stake' in September 2022. These subpoenas have a narrow scope, centering on the Ethereum Foundation exclusively.

In response to Fortune's request, the SEC maintained its policy of neither confirming nor denying the existence of a potential investigation.

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