- State authorities conduct a confidential investigation into the foundation.
- Ethereum’s recent Dencun upgrade aims to lower fees on layer-2s.
- The investigation emerges as Ethereum faces regulatory scrutiny.
The realm of blockchain tech stands at a crossroads between innovation and regulation. Ethereum, the largest smart contract network, is among the chains affected by increased scrutiny by regulators.
Most recently, the Ethereum Foundation, a key organization behind the Ethereum network, was investigated by an unspecified “state authority.” The Foundation revealed so with a small website change, which reporters recently noticed.
Ethereum Foundation Reveals Confidential Investigation
Reports on Wednesday, March 20, revealed facts suggesting that an unnamed state authority is investigating the Ethereum Foundation, a Swiss-based non–profit organization supporting the Ethereum network. Namely, the Ethereum Foundation removed a significant section of its website.
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Before the update, the section that the Foundation has “never been contacted by any agency anywhere in the world in a way which requires that contact not to be disclosed.” The section said Ethereum would publicly disclose “any sort of inquiry from government agencies that falls outside the scope of regular business operations.”
The text was an example of a “warrant canary,” a method by which a service provider implicitly informs its users about government subpoenas. Because these often come with confidentiality requirements, the service provider cannot discuss them directly. They can, however, remove the warranty canary, thereby informing their users that a subpoena has been served.
This is exactly what the Ethereum Foundation did on February 24, when the website section was removed. According to the Foundation’s GitHub repository, the section was removed after receiving an inquiry from an unnamed state authority.
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“This commit removes a section of the footer as we have received a voluntary enquiry from a state authority that included a requirement for confidentiality,” wrote Pablo Pettinari, a lead developer for the Ethereum Foundation.
Ethereum ETFs Under Regulatory Scrutiny
This investigation coincides with a period of notable technical progress for Ethereum. Notably, the blockchain recently implemented the Dencun upgrade, which is targeted at decreasing transaction fees on layer-2 networks, thereby enhancing the user experience.
Concurrently, the crypto community is keenly observing the regulatory stance on Ether ETFs in the U.S., with decisions expected in the coming months.
On the Flipside
- Removing the warrant canary suggests that the Foundation might be navigating complex legal waters.
- So far, it is not clear which regulatory body is investigating the Ethereum Foundation.
Why This Matters
ETH investors should be aware of any legal issues the Foundation might be facing, as the network’s growth and development depend on it.
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