Ethereum Foundation Under Investigation by State Authority
The Ethereum Foundation, a non-profit organization dedicated to the development of the Ethereum ecosystem, is currently facing an investigation by an undisclosed “state authority.” This information was first disclosed on GitHub on February 26, revealing that the foundation has received subpoenas related to the ongoing investigation.
Rumors have also been circulating that the US Securities and Exchange Commission (SEC) is launching a campaign to classify Ethereum as a security. While there is no official confirmation from either the Ethereum Foundation or the SEC at this time, Fortune reports that the SEC may be the “state authority” mentioned in the investigation.
According to Fortune’s report, the investigation was initiated in September 2022 when Ethereum began transitioning from Proof-of-Work to Proof-of-Stake. The SEC has expressed concerns about staking services in the past and has used it as a basis to potentially classify Ether as a security.
The US Just Won’t Quit
This news comes amidst the ongoing regulatory review of several spot Ethereum exchange-traded fund (ETF) filings. The investigation into the Ethereum Foundation could potentially delay or prevent the approval of these products. On the same day as this revelation, the SEC decided to postpone VanEck’s spot Ethereum ETF filing. The decision on whether to approve an Ethereum ETF is expected on May 23.
Eleanor Terret, a journalist from Fox News, commented on this matter and noted that if Fortune’s report is accurate, it would explain why the SEC has remained silent on the spot Ethereum ETF topic compared to its previous statements on spot Bitcoin ETF filings. However, Terret also mentioned that in 2018, the SEC deemed ETH not a security, so it is possible that they will revisit the Initial Coin Offering (ICO) that funded Ethereum’s launch as part of their investigation.
Currently, Bitcoin is the only cryptocurrency that has received regulatory approval from the SEC. The SEC stated in a previous statement regarding the spot Bitcoin ETF approval that Bitcoin is considered a non-security commodity. However, the SEC’s current stance on Ethereum’s legal status remains unclear. SEC Chair Gary Gensler has previously emphasized that most cryptocurrencies fall under the security classification based on the Howey test.
Ethereum’s Price and Recent Upgrade
In recent days, Ethereum (ETH) has experienced a correction as its price dropped below $4,000. At the time of writing, ETH is trading at around $3,300, marking a 17% decrease over the past week. Despite the negative news, Ethereum recently underwent a successful upgrade.
Last week, Ethereum completed its Dencun upgrade and officially activated EIP-4844 on the Ethereum mainnet. Dencun is a significant milestone for Ethereum following the Shapella upgrade. This upgrade incorporates five Ethereum Improvement Proposals aimed at increasing storage space for data and reducing fees.
The main focus of this upgrade is EIP-4844, also known as proto-danksharding. It expands the blockchain by creating more space for data “blobs,” which is expected to reduce gas fees for layer 2 rollups. Following the deployment of Dencun, prominent Layer-2 chains have started adopting EIP-4844 and have seen a significant decrease in average transaction costs.
For example:
- Gas fees on Base dropped from about $0.50 on March 13 to about $0.0012.
- The average fee on Base currently stands at $0.06.
- Transaction fees on Optimism have also significantly improved.
Users on Starknet have confirmed that transaction fees have decreased as well. Argent, one of the largest wallet providers on the network, noted that the fee for a token sale on Starknet is now only $0.04, significantly lower than before the implementation of Dencun.
Arbitrum One, the most popular Layer-2 solution, recently launched its ArbOS Atlas upgrade to support Ethereum’s Dencun by implementing blobs.
Hot Take: Uncertainty Surrounding Ethereum’s Investigation
The news of the Ethereum Foundation being investigated by a “state authority” has caused uncertainty in the crypto community. If the SEC is indeed behind the investigation, it could have significant implications for Ethereum’s regulatory status and future developments.
While Bitcoin has received regulatory approval from the SEC, Ethereum’s legal standing remains unclear. The outcome of this investigation could potentially affect the approval of spot Ethereum ETFs and shape the regulatory landscape for cryptocurrencies.
As an investor or enthusiast in the crypto space, it is crucial to stay informed about these developments and monitor any updates regarding Ethereum’s investigation. The outcome of this investigation could have far-reaching consequences for the entire industry.
Source: Twitter
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