The Ethereum Foundation (EF) has come under investigation by an undisclosed “state authority,”. As per a commit message on GitHub, the EF received a “voluntary inquiry” from the authority, accompanied by a confidentiality requirement. 

The details and scope of the investigation remain undisclosed, leading to speculation and uncertainty within the Ethereum community. However, this is the first time in the Ethereum Foundation’s history that it has faced such legal action. 

Ethereum Foundation Removes Warrant Canary

In a significant development, the Ethereum Foundation has removed its Warrant Canary from its website, indicating that it has been subpoenaed by a government agency in the US, according to former investment banker Husslin Narwal. 

For further context, a warrant canary is a method used by organizations to communicate to the public that they have not received any secret subpoenas or government requests for user data or surveillance. It is a way for organizations to signal their compliance with legal requests without directly disclosing sensitive information. 

Narwal further suggested that the inclusion of a confidentiality requirement suggests a gag order, restricting or prohibiting certain individuals or entities from speaking or disclosing certain information to the public or other parties, limiting the Foundation’s ability to disclose information about the investigation.

Moreover, Narwal highlighted several key points, including the foundation’s compliance with the authorities and willingness to provide private data. The delay in Ethereum Exchange-Traded Funds (ETFs) and the alleged lack of communication between the US Securities and Exchange Commission (SEC) and ETF issuers have led to speculation that the investigation may be linked to the ETF rejection. 

Speculation Mounts 

Narwal also mentioned the recent “weakness” in Ethereum’s price, possibly influenced by alleged insiders anticipating a negative outcome from the SEC. He suggested that the SEC may find evidence that casts doubt on Ethereum’s decentralization, such as a concentration of token ownership. 

Additionally, Narwal mentioned previous reports suggesting significant Chinese ownership of ETH or the investigation related to fraud or tax matters. Narwal concluded his analysis by stating:

Without any more info from the Foundation or any state authorities, traders will probably assume the worst and derisk 

Overall, the Ethereum Foundation’s investigation by an unnamed state authority has created uncertainty and speculation within the Ethereum community. The removal of the Warrant Canary and the confidentiality requirement have limited the foundation’s ability to provide details about the investigation. 

As the situation unfolds, market participants eagerly await more information to gain clarity on the investigation’s scope and its potential impact on the Ethereum ecosystem.

Despite the growing speculation surrounding the Ethereum Foundation, ETH has managed to recover the $3,289, coupled with a 4% gain in the last 24 hours. 

Featured image from Shutterstock, chart from TradingView.com