The SEC has been investigating the security posture of Ethereum since 2018: Report

The U.S. Securities and Exchange Commission (SEC), currently led by Chairman Gary Gensler, has been investigating Ethereum’s status as a security since at least 2018, Fox Business reported.

A lawsuit filed by blockchain software company Consensys has brought to the public’s attention the SEC Enforcement Division’s formal investigation into “Ethereum 2.0,” which began on March 28, 2023.

The agency’s investigative authorization on April 13, 2023 gave it authority to issue subpoenas to individuals and entities involved in Ethereum transactions.

The SEC’s investigation has focused on possible unregistered offerings and sales of Ethereum since at least 2018, a departure from previous guidance from former Chairman Jay Clayton that did not classify Ethereum as a security.

The SEC’s alleged position on Ethereum contrasts with the Commodity Futures Trading Commission (CFTC)’s previous classification of Ethereum as a commodity.

Consensys’ preemptive legal challenge challenges the SEC’s right to determine Ethereum’s classification.

SEC Chairman Gary Gensler has refrained from publicly confirming the agency’s position on Ethereum despite inquiries from the House Financial Services Committee.

The SEC’s investigation into Ethereum calls into question the legal status of Ethereum and the future of Ethereum-based financial products, including the possibility of a spot Ether exchange-traded fund (ETF).

The SEC is expected to reject applications for a spot Ethereum ETF next month, according to a Reuters report last week.

According to CoinGecko, the overall cryptocurrency market cap fell 3.1% to $2.44 trillion as of 3 PM ET.

Ethereum has fallen nearly 5% to US$3,171 over the past 24 hours.