TLDR
- New York Attorney General urged the SEC to classify ETH as a security during the KuCoin case.
- Coinbase obtained the internal communication through Freedom of Information Act request.
- Shamiso Maswoswe from the NYAG’s office sent the request to SEC leadership in 2023.
- The SEC chose not to support ETH’s classification as a security publicly.
- New York proceeded with the KuCoin case under state laws covering securities and commodities.
Newly released government documents show that the New York Attorney General pushed the SEC to classify ETH as a security. According to an email obtained by Coinbase, the push came during the 2023 enforcement action against crypto exchange KuCoin. The SEC ultimately declined to take a public stance, choosing instead to remain silent on ETH’s regulatory classification.
The correspondence was part of a Freedom of Information Act request filed by Coinbase and later published on its website. The request revealed internal communications between the New York Attorney General’s Office and SEC leadership.
Maswoswe urged the SEC to file an amicus brief supporting the claim that ETH qualifies as a security. She stated this move would support broader efforts to protect users in the digital asset market. Though the SEC refused, the NYAG pursued KuCoin, as New York has authority over securities and commodities.
ETH Under Legal Scrutiny Amid Proof-of-Stake Transition
The NYAG’s appeal came amid growing uncertainty about ETH following Ethereum’s shift to a proof-of-stake model. Previously, the SEC had signaled that ETH likely operated as a commodity under U.S. law. However, the transition raised concerns that ETH might now meet the criteria of a security.
As Ethereum changed its consensus mechanism, legal experts began questioning whether the asset’s structure resembled an investment contract. These doubts led to heightened regulatory focus and contributed to the NYAG’s appeal to the SEC. The SEC, however, maintained silence and has never issued a definitive classification for ETH.
Although the SEC’s decision to avoid a public statement left the matter unresolved, the agency continued investigating digital assets. Meanwhile, ETH’s legal status remains central in regulatory debates across different jurisdictions. The KuCoin case amplified those questions but failed to produce clarity on ETH.
KuCoin Pays Fine and Leaves NY
In December 2023, KuCoin settled with the New York Attorney General by agreeing to pay $22 million and leave the state. The settlement resolved allegations of operating as an unregistered platform for trading digital assets, including ETH. Attorney General Letitia James described the case as part of ongoing efforts to enforce digital asset laws.
Despite ETH being part of the case, the SEC refrained from participating or filing a supporting legal brief. The documents show that SEC officials discussed ETH’s classification internally but chose not to act publicly. This strategic silence has contributed to the continued regulatory ambiguity surrounding ETH.
