The price of Ethereum dipped overnight following revelations that the U.S. Securities and Exchange Commission (SEC) has secretly considered the cryptocurrency a security for over a year.

Ethereum is currently trading at a weekly low around $3,050, down 3.9% on the day, per data from CoinGecko. In the past day, traders have moved roughly $15 billion worth of volume. ETH is now trading 15% lower than it was a month ago.

Its downward price movement follows the publication of previously redacted portions of a lawsuit filed by Consensys against the SEC. According to the software firm's complaint, an internal Formal Order issued by the regulator in March 2023 explicitly referred to the investigation of "certain securities, including, but not limited to ETH."

The internal order stands in stark contrast to the regulator's public refusal to explicitly state whether it considers Ethereum a security. SEC Chair Gary Gensler has repeatedly deferred when asked to outline the SEC's position on the matter, including during a House Financial Services Committee oversight hearing in October 2023.

Were the SEC to define Ethereum as a security, it would also contradict Gensler's own prior statements on the matter; in 2018, while still a lecturer at MIT, he stated that Ethereum is “not a security” in the eyes of the SEC. Gensler was seemingly referencing an opinion expressed by the SEC's former Director of Corporate Finance, William Hinman, in a June 2018 speech in which he described Ethereum as "sufficiently decentralized" that it could not be considered a security.

However, those statements predate Ethereum's 2022 "Merge," in which the blockchain network switched from the proof-of-work consensus mechanism employed by Bitcoin to a proof-of-stake model.

In September 2022, as the Ethereum network's Merge took place, Gensler suggested that proof-of-stake cryptocurrencies could be considered securities, a view he's since reiterated. And the SEC's March 2023 internal order specifically references an investigation into "Ethereum 2.0," the name commonly used to describe the post-Merge network.

The SEC's position on Ethereum comes at a crucial time, as the regulator considers whether approve or reject multiple applications for spot Ethereum ETFs. The SEC has repeatedly delayed its decision on applications from asset managers including Grayscale, BlackRock and Franklin Templeton.

With a key deadline looming in late May, ETF watchers have turned pessimistic on the chances of approval, with investment bank JP Morgan giving even odds on whether it'll be approved or rejected.

Edited by Stacy Elliott.