The U.S. Securities and Exchange Commission (SEC) is investigating the Ethereum Foundation and companies doing business with the nonprofit, according to a new report wealth Wednesday. This is very bad news for cryptocurrency enthusiasts who were hoping that a spot Ethereum ETF would soon receive regulatory approval, which would make it easier for investors to invest in the cryptocurrency without physically holding it.
After the news came Coin platform A recent note added by the Ethereum Foundation was first noticed on Wednesday jitub About being investigated by unnamed “state authorities.” “The SEC does not comment on the existence of a possible investigation,” an SEC spokesman told Gizmodo via email on Wednesday.
According to people who spoke to Fortune, the apparent purpose of the SEC investigation is to classify Ethereum as a security.U.S. Securities and Exchange Commission Chairman Gary Gensler has previously said that Bitcoin is not a security and should be classified as a commodity, while suggesting that almost all other cryptocurrencies is a security.
From Fortune:
The U.S. Securities and Exchange Commission’s (SEC) investigation into the Swiss-based Ethereum Foundation follows the blockchain’s shift to something called “proof-of-stake” in September 2022, according to a person at a company that recently received a subpoena request. The new governance model began shortly after.
That proof-of-stake incident moved the blockchain away from the energy-intensive model used by Bitcoin to one that relies on a network of trusted validators, and gave the SEC a new excuse to try to define Ethereum as a securities, according to people familiar with the subpoenas at three different companies.people ask wealth They or their companies were not identified out of fear of retaliation from the agency’s chairman, Gary Gensler, who some described as “vindictive.”
Why does it matter that Ethereum is a security? This means that Ethereum and the exchanges that trade it will be subject to stricter enforcement by the SEC.
The price of Ethereum has fallen by approximately 14% in the past five days, but is still up 98% in the past six months. At the end of September, the cryptocurrency was trading around $1,600.
Ethereum was created in 2015 by programmer Vitalik Buterin after he became frustrated with the diminishing power of his favorite World of Warcraft character. For Buterin, it was then that he “realized the horrors of centralized services,” which led him to create an ostensibly decentralized cryptocurrency.
According to Forbes, Buterin is worth an estimated $400 million, less than $1.4 billion in 2021.