Fortune today revealed that the U.S. Securities and Exchange Commission (SEC) is investigating the Ethereum Foundation, headquartered in Switzerland. The SEC has issued subpoenas to three companies, demanding that they provide more documents and financial records related to their dealings with the Ethereum Foundation. The industry believes that this investigation reflects the SEC’s plan to classify ETH as a regulated “security.”
The investigation into the Ethereum Foundation by a “certain national agency” was reported to be kept confidential. Bloomberg analysts previously stated that the probability of the approval of the Ethereum spot ETF in May is only 25%, causing ETH to briefly drop to $3,150.
The disclosure of the Ethereum Foundation’s investigation by the SEC is said to be registered in the Github database. According to Fortune, the SEC is investigating the Ethereum Foundation, headquartered in Switzerland, and has issued subpoenas to at least three companies, requesting more documents and financial records related to their dealings with the Ethereum Foundation. The Ethereum Foundation is a non-profit organization responsible for overseeing the governance and development of the Ethereum network.
One U.S. company that received a subpoena stated that the SEC seems to be launching an aggressive legal action to classify the second largest cryptocurrency, ETH, as a regulated “security.”
According to an anonymous source from a company that recently received a subpoena, the SEC’s investigation into the Ethereum Foundation began shortly after Ethereum’s transition from proof-of-work (PoW) to proof-of-stake (PoS) network in September 2022.
Another company that received a subpoena stated that the scope of the investigation is narrow and mainly focuses on the Ethereum Foundation. They also mentioned receiving the subpoena in the past few weeks. The sources from the three different companies that received subpoenas requested anonymity due to concerns about retaliation from SEC Chairman Gary Gensler, with some claiming that Gensler has a retaliatory mindset.
Both the Ethereum Foundation and the SEC declined to comment on this news. The SEC stated that they “do not comment on whether there may or may not be possible investigations.” Cryptocurrency lawyer Gabriel Shapiro commented that he believes the SEC’s decision to classify Ethereum as a security would receive support from U.S. courts, otherwise its impact on the real world would be limited.
The news of the SEC’s plan to classify Ethereum as a security has greatly affected the hopes for the approval of Ethereum spot ETFs by financial institutions such as BlackRock and Fidelity in May this year. Bloomberg ETF senior analyst Eric Balchunas stated on Twitter that they currently estimate the probability of the approval of Ethereum spot ETFs in May to be only 25%, confirming Gensler’s view that ETH is considered a security.
It is worth mentioning that SEC Chairman Gary Gensler’s remarks on whether Ethereum is a security have been repeatedly questioned by the cryptocurrency industry and Congress. He was previously caught stating in 2018 that tokens like Bitcoin and Ethereum are “not securities.” However, he has refused to directly answer questions about whether ETH is a “security” since taking office. However, with Ethereum’s transition to the PoS mechanism, Gensler has previously warned that PoS cryptocurrencies may be subject to securities regulation. In addition, when the SEC recently postponed its decision on the BlackRock Ethereum spot ETF application for the second time this month, it also sought public opinion on whether Ethereum’s PoS mechanism raised “unique concerns about fraud and manipulation of Ethereum,” embodying the key point of whether the SEC will classify Ethereum as a “security.”
Following the disclosure of the SEC’s investigation into the Ethereum Foundation, ETH briefly dropped to $3,140 in the late night but has now rebounded to $3,549, with an increase of nearly 10% in the past 24 hours.
Source: Trading View