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According to the latest reports by Fortune, the SEC seeks to classify ETH as a security.
Undisclosed state authorities have launched an investigation into the Ethereum Foundation, the non-profit organization responsible for overseeing the network, for an alleged crime.
CoinDesk reported on Wednesday, citing the Foundation’s GitHub commit published last month, that the organization received an official notice of voluntary inquiry from an unnamed “regulatory body”, including a requirement for “confidentiality”.
Ethereum Foundation Linked to Gatecoin Hack
The notice was posted on GitHub last month in February. However, the scope and focus of the investigation remained sealed as the Foundation failed to return CoinDesk’s request for comment.
While the details of the probe are yet to be known, in January an on-chain sleuth known within the crypto community as Boringsleuth posted on X that the Foundation could be involved in the attack on Gatecoin in 2016.
Gatecoin, a crypto exchange based in Hong Kong, was exploited for 185,000 Ethereum (Ether) and 250 Bitcoin (BTC).
Boringsleuth claimed that he investigated the hack using blockchain analysis tools. During the investigation, he found that some of the stolen funds were sent to an address belonging to the Swiss-based non-profit organization.
The on-chain investigator said in his report that he has evidence to back up the claim that the Foundation was involved in the crime.
🚨🧵Proof of the Ethereum Foundations involvement in the Gatecoin Hack in 2016, prior to the DAO exploit 🚨
Below is a thread showing transactional evidence linking the Ethereum Team to the 185K Ether stolen from Gatecoin, now worth over $460M today. 👇
— TruthLabs 🫡 (@BoringSleuth) January 17, 2024
A few days after Boringsleuth posted the long thread on X, indicating that the Ethereum Foundation may be involved in the exploit on Gatecoin, he made another post that an independent law firm is launching an official investigation into the matter.
SEC Launches Probes on Ethereum
Amid the legal challenges brewing against the Ethereum Foundation, Fortune reported that the US Securities and Exchange Commission (SEC) is currently investigating the network itself.
According to the report, the investigation is centered around uncovering whether Ether could be classified as a security token.
People familiar with the probe said the financial watchdog began the investigation in 2022 after the successful migration of the network to a Proof-of-Stake (PoS) blockchain through a process known as the Merge.
The SEC also extended the probe to the Ethereum Foundation. The financial authorities subpoenaed companies that had business dealings with the Foundation to provide documents and financial records related to their interactions with them.
Meanwhile, according to CoinMarketCap data, Ether has dipped more than 2% since the news of the investigation.
