Ethereum Foundation faces probe from 'state authority' over undisclosed reasons
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Crypto as an industry is steadily maturing, even with the proliferation of hacks and whatnot. It’s a mixed bag: strong institutional interest, coupled with increased regulatory scrutiny, and a memecoin mania that has reached unprecedented levels.
This could be why regulators such as the SEC are now reportedly looking into documents from organizations involved in developing blockchains, such as the Ethereum Foundation, which found itself under investigation by a certain “state authority,” prompting the organization to retract disclosures on its website.
Meanwhile, the world’s largest pension fund based in Japan is exploring the potential inclusion of Bitcoin and other illiquid assets in its long-term investment strategies. This move could set a precedent for other global pension funds and further legitimize Bitcoin as a viable investment option.
In other news, the aftermath of Celsius Network’s bankruptcy continues to unfold. The company is now seeking to recover $2 billion from users who withdrew funds in the 90 days leading up to its Chapter 11 filing, aiming to ensure fair treatment of all creditors.
These are the events that happened as the Federal Open Market Committee held a meeting earlier today, during which the Federal Reserve decided to keep interest rates unchanged to maintain a cautious approach. This decision was widely expected, with crypto’s response seen in the form of an extended correction and a pullback to last week’s levels.
Today’s Newsletter
- Ethereum Foundation faces probe from ‘state authority’ over undisclosed reasons
- Japan’s trillion-dollar pension fund considers Bitcoin for diversification
- Celsius seeks $2 billion from pre-bankruptcy withdrawals
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ETHEREUM
Ethereum Foundation faces probe from ‘state authority’ over undisclosed reasons
The Ethereum Foundation, a Swiss non-profit organization central to the Ethereum ecosystem, is currently under investigation by a certain. The probe was revealed through a recent update on the Foundation’s GitHub repository, which included a confidentiality requirement, and the removal of a warrant canary from its website. The warrant canary, a statement indicating that the organization has not been subject to any secret government subpoenas or document requests, was removed, suggesting that such a request may have been received.
Speculation surrounding the investigation points to a potential collaboration between a Swiss regulator and the US Securities and Exchange Commission (SEC), with a lawyer familiar with the situation suggesting that other overseas entities might also be under scrutiny. A follow-up report from Fortune claims that the SEC is pushing to classify Ethereum as a security, pointing to a possible link between the regulators.
The investigation comes at a time when Ethereum is undergoing significant technological changes, such as the recent Dencun upgrade, and the SEC is evaluating multiple applications for an Ether ETF, with a final deadline approaching on May 23. [cryptobriefing]
BITCOIN
Japan’s trillion-dollar pension fund considers Bitcoin for diversification
Japan’s Government Pension Investment Fund (GPIF), one of the world’s largest pension portfolios with approximately $1.54 trillion in assets under management, has recently expressed interest in exploring bitcoin as part of its new long-term investment policies. The fund has initiated a five-year research plan to discover innovative investment diversification strategies, focusing on sustainability and risk management. As part of this initiative, GPIF is gathering information on various illiquid assets, including cryptocurrencies like bitcoin and precious metals such as gold.
The announcement does not immediately translate into the inclusion of bitcoin in GPIF’s portfolio, as the fund will assess the gathered data and conduct thorough due diligence before deciding whether to proceed with further research on these potential investment tools. However, this move marks a shift in institutional investors’ acceptance of bitcoin and could set a precedent for other global pension funds, many of which are already exploring or have integrated bitcoin-related assets into their portfolios. GPIF’s exploration into digital currencies comes at a time when institutional interest in bitcoin is increasing, solidifying its legitimacy as a viable component of institutional investment strategies. [forbes]
REGULATION
Celsius seeks $2 billion from pre-bankruptcy withdrawals
Advisors overseeing the bankruptcy proceedings of Celsius Network, a crypto lending platform, are demanding that customers who withdrew over $100,000 in the 90 days before the company’s bankruptcy filing return those funds, amounting to over $2 billion. The Celsius committee aims to prevent those who withdrew funds early from having an unfair advantage over creditors who didn’t withdraw, citing the US Bankruptcy Code, which allows companies to recover funds paid out just before filing to ensure fair treatment of all creditors. The clawback effort targets approximately 2% of Celsius users but accounts for 40% of the platform’s assets withdrawn at the time.
Celsius is offering customers a “favorable rate” settlement to avoid potential litigation, considering the value of withdrawn assets at the time of withdrawal and allowing customers to keep any gains from recent price increases. However, customers who refuse the settlement risk being forced to return a potentially larger sum through lawsuits. The company’s recent successful reorganization and exit from bankruptcy proceedings involved working closely with the Official Committee of Unsecured Creditors (UCC) and federal and state regulatory agencies to facilitate the distribution of over $3 billion to its creditors. [cryptobriefing]
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