that much Ethereum We have learned that the Foundation, a Swiss non-profit organization that plays a pivotal role in operating the Ethereum ecosystem, is being investigated by an undisclosed state agency. This revelation follows a period of supposed transparency and non-involvement in government investigations, as highlighted in the foundation’s previous disclosures. The Ethereum Foundation has consistently assured the community that it has never been approached in a way that requires secrecy. But the removal of those disclosures and the warrant canary from the website dramatically changed that position, signaling a potentially important legal development.
Adding intrigue to the situation is speculation by legal experts familiar with the matter, suggesting that the Swiss regulator’s involvement may be linked to collaborative efforts with the U.S. Securities and Exchange Commission (SEC). This comes at a time when the regulatory environment for cryptocurrencies is very unstable, especially with the SEC’s deadline for a decision on a spot Ethereum ETF looming.
Unnamed state entity shifts focus to Ethereum Foundation
The Ethereum Foundation, a Swiss non-profit organization at the core of the Ethereum ecosystem, is under investigation by unnamed “state authorities.”
On February 26, 2024, GitHub stated, “We have received unsolicited inquiries from state authorities that include confidentiality requirements.” commit It is linked to the Ethereum Foundation homepage. The scope of this investigation is still unclear.
The foundation’s website previously included the following disclosure:
“The Ethereum Foundation (Stiftung Ethereum) has never been contacted by any body in the world in a way that requires us not to disclose our contacts. Stiftung Ethereum will publicly disclose any kind of inquiries from government agencies outside its regular scope. .Business Operations.”
However, this footer was removed in the February 26th GitHub commit. The website’s warrant canary was also removed the same day, according to the repository’s change log.
What is a Warrant Canary?
A warrant canary is a method used by organizations to passively notify users that they have not received secret government surveillance or data requests, such as those issued through national security letters or similar legal tools. The name comes from the historical use of canaries in coal mines, where the birds succumbed to toxic gases before humans, acting as an early warning system for miners. Similarly, warrant canaries act as an alert mechanism, but instead of alerting you to the presence of a risk, if a warrant canary disappears or is removed, the service provider may have received a confidential request for user data and is legally prohibited from disclosing the request directly for the following reasons: represents . Gag order.
This mechanism typically involves regularly publishing digitally signed statements confirming that the organization has not received confidential requests for user data up to a certain point. This statement is often included in transparency reports or posted on the organization’s website. A key aspect of a warrant canary is the absence of a statement announcing the case. When an organization receives a request that cannot be made public, it can stop or remove canary-door updates to notify users of the status change without violating the gag order.
The legality and effectiveness of warrant canaries have been a subject of debate. Some argue that this concept occupies a legal gray area because it has not been thoroughly tested in court. Critics also point to potential legal problems and ambiguities in interpreting Canary’s disappearance. This is especially true if your organization fails to update or remove canaries for reasons unrelated to confidential data requests. Despite these concerns, warrant canaries have been adopted by a variety of organizations, especially those that prioritize privacy and transparency, as a tool to indirectly inform users of the confidentiality of their data and potential exposure to government surveillance.
Potential cooperation between SEC and Swiss regulators
A lawyer familiar with the situation said Swiss regulators may have forwarded a request for documents to the federal government. Ethereum base. The Swiss regulator may be working with the US SEC, which has a reputation for regulating through an enforcement approach, the lawyer added.
“I think it’s fair to say that the Ethereum Foundation is not the only entity seeking information,” the lawyer said in a recent interview. This rumored activity with overseas traders may also be related to the May 23 approval deadline for a spot Ethereum exchange-traded fund (ETF), the lawyer speculated.
This comes after the SEC recently postponed a decision on one of these ETFs. This leaves regulators with no choice but to issue a ruling on May 23, the final deadline for one of the applications.
The approval of a spot Bitcoin ETF in the United States earlier this year sparked a surge of optimism about the possibility of other cryptocurrency-based ETFs receiving approval. Being the largest altcoin, investors and analysts were confident that the ETH ETF would receive approval soon after BTC-based investment products received approval from the SEC.
However, hope Spot ETH ETF The number of companies approved in May of this year has decreased significantly. Analysts including Bloomberg ETF analyst James Seyffart recently said the application would likely be rejected by the SEC in May. His colleague Eric Balchunas expressed similar sentiments. This comes after two analysts expressed optimism about this potential approval earlier this year in May.