Ethereum’s Governance in Question: Foundation Reportedly Faces Undisclosed State Scrutiny

The Ethereum Foundation, a Swiss non-profit central to the Ethereum ecosystem, reportedly faces scrutiny. An undisclosed “state authority” is investigating the organization, revealed through a GitHub repository update on February 26, 2024.

The nature and details of the probe remain shrouded in mystery.

Ethereum Dips 2% in Less Than 5 Minutes

According to CoinDesk, the Foundation has received a confidential inquiry from a state body. Amidst this development, the price of Ethereum has dipped by around 2% in less than 5 minutes.

Ethereum, a major blockchain entity second only to Bitcoin, has been a key player since its 2015 inception and the subsequent launch of its native ETH token.

Moreover, Ethereum recently executed a significant technical overhaul named Dencun. This upgrade aimed to reduce transaction fees on Ethereum-based layer-2 platforms, marking a pivotal moment in its technological evolution. Concurrently, the United States is on the cusp of a decision regarding the Ethereum ETF, with a critical deadline looming in late May for certain applications.

Read more: Ethereum ETF Explained: What It Is and How It Works

The investigation emerges amid these technological and financial shifts. Historically, the Ethereum Foundation has maintained transparency regarding governmental inquiries, as evidenced by a now-removed website disclaimer. This disclosure pledged to reveal any non-routine governmental contact, an assurance erased in the February GitHub update.

The removal of the website’s warrant canary alongside the disclaimer raises eyebrows. Typically, a warrant canary serves as a covert alert to government subpoenas or demands, its disappearance hinting at such occurrences without explicit acknowledgment. Notably, the Foundation had mistakenly removed this canary in 2019, only to reinstate it swiftly.

Speculation abounds regarding the investigation’s origins and intent. An attorney with knowledge of the matter suggested that Swiss regulators, possibly in collaboration with the US Securities and Exchange Commission (SEC), might have issued a document request to the Ethereum Foundation.

This inquiry seems part of a broader effort, with other international entities also under examination, according to an attorney familiar with the matter.

“I also think it’s fair to say the Ethereum Foundation is not the only entity that they are seeking information from,” the attorney told CoinDesk.

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