Recent court filings have exposed that the US Securities and Exchange Commission (SEC) conducted a year-long investigation into whether Ethereum should be classified as an unregistered security. This investigation sheds light on the ongoing regulatory uncertainty surrounding Ethereum, the world's second-largest cryptocurrency, and provides insight into the SEC's internal deliberations regarding Ether’s classification.

The SEC started a formal investigation into Ethereum's security status on March 28, 2023, under the Division of Enforcement led by Gurbir Grewal. Recipients of subpoenas were instructed to maintain strict confidentiality during this investigation, emphasizing the sensitivity of the matter.

The investigation, named “Ethereum 2.0”, aimed to examine potential security offers and sales related to Ethereum, dating back to at least 2018. The documents revealed that if Ether were to be classified as a security, it would contradict previous statements by former SEC officials who claimed that Ethereum, like Bitcoin, was not a security.

During SEC Chair Gary Gensler's recent appearance before the House Financial Services Committee, he avoided questions regarding Ethereum's regulatory status. Despite his reluctance to clarify the situation, speculation within the crypto industry has intensified, especially as Ethereum transitions to a proof-of-stake consensus mechanism.

The uncertainty surrounding Ethereum's regulatory status has impacted its price, with ETH seeing a price drop of over 10% in the last month. As of now, Ether is trading at around $3,173.