Newly unveiled documents show that the New York Attorney General (NYAG) pressed the U.S. Securities and Exchange Commission (SEC) to officially classify Ethereum (ETH) as a security in the agency's 2023 enforcement action against crypto exchange KuCoin. Communications uncovered through a Freedom of Information Act (FOIA) request by Coinbase include an email from NYAG’s Investor Protection Bureau chief requesting the SEC to file an amicus brief supporting this stance. The argument was presented as a means to bolster investor protections, though NYAG noted that the classification would not directly impact the state's ability to prosecute KuCoin. The SEC ultimately chose not to file the brief and has since maintained an ambiguous public position on ETH’s regulatory status.
Historically, the SEC identified Ethereum more as a commodity, but post-Ethereum's switch to proof-of-stake, debates about its security status increased. Despite heightened scrutiny, the SEC still has not officially declared ETH a security. The documents revealed further internal SEC discussions about digital asset classification, touching on other coins like Ripple's XRP and wider regulatory boundaries in the crypto sector. Coinbase continues releasing such FOIA-obtained information as part of its campaign for greater regulatory transparency.
The KuCoin case resulted in a $22 million settlement and KuCoin ending New York operations in December 2023, reflecting broader efforts by NY authorities to enforce licensing among crypto platforms.