‘Time to seriously consider dissolving Ethereum Foundation’ – Aave’s Zeller

• Ethereum Foundation defended itself after a recent ETH sell-off sparked scrutiny
• EF has been accused of a ‘lack of transparency’

Ethereum Foundation is in the news today after it faced criticism from the crypto community following a recent 35k ETH sell-off on Kraken. Some of the community members were disappointed with the timing of the sell-off. According to them, the Foundation took advantage of the Friday bounce to cash out. 

Some, like pseudonymous Ethereum core developer and evangelist Anti Prosynth, questioned how the Foundation could move funds without prior disclosures. 

“Financial disclosures @ethereum, seriously. How on earth is this an opportune time to do these kind of movements without as much as a peep?”

Similarly, Eric Conner, another ETH core dev, also claimed that the Foundation’s lack of transparency was “extremely frustrating.”

“But the lack of transparency from the EF for 10 years is shocking and extremely frustrating. It’s REALLY not a lot to ask for simple financial reports or clarity around fund movements/usage.”

Ethereum Foundation defends itself

On the contrary, Aya Miyaguchi, Executive Director of the Ethereum Foundation, clarified that the recent 35k ETH sell-off was part of the organization’s “treasury activities” and some only receive payments in fiat. She said, 

“This is part of our treasury management activities. EF has a budget of ~$100m per year, which is largely made up of grants and salaries, and some of the recipients are only able to accept in fiat.”

She added that they couldn’t share planned fund movements in advance, given the regulatory challenges they faced in early 2024. 

“This year, there was a long period of time when we were advised not to do any treasury activities due to the regulatory complications, and we were not able to share the plan in advance…There will be planned and gradual sales from here on.”

For context, in early 2024, the EF was under an intense U.S SEC investigation, which reportedly began after the network changed to PoS (Proof of Stake) in September 2022. The agency was trying to ascertain whether ETH was a security, but it later dropped the investigations and approved U.S spot ETH ETFs in Q2. 

Some like Marc Zeller, Founder of Aave [AAVE], were unsatisfied with Miyaguchi’s clarifications though. 

Zeller claimed that some of Ethereum’s team, like Geth (Go Ethereum, the popular Ethereum client), have been earning little to warrant the $100 million annual budget. He suggested dissolving EF after upcoming upgrades. 

“100m$/year for what? The Geth team… receives meager pay despite critical work. Once the Purge & Verge upgrades are delivered, it’s time to seriously consider dissolving the EF.”

According to Arkham data, the recent sell-off has reduced the Foundation’s ETH holdings to 273k coins, worth nearly $800M based on current market prices. 

Source: Arkham