- Coinbase found SEC documents showing confusion over Ethereum 2.0’s status after its move to proof of stake.
- The SEC took no action but still delayed releasing over one hundred thousand Ethereum 2.0 investigation files.
- Emails and memos showed the SEC debated Ethereum rules even after closing the investigation with no charges.
Coinbase has uncovered critical U.S. Securities and Exchange Commission documents linked to Ethereum 2.0’s regulatory investigation. The release comes from a Freedom of Information Act (FOIA) lawsuit filed by Coinbase.
These internal records outline the SEC’s indecision on whether Ethereum 2.0 qualifies as a security. The documents include detailed discussions on ETH’s legal classification following its shift from proof-of-work to proof-of-stake.
Key Memos Reveal Regulatory Concerns
The SEC compiled a “Vaughn index” listing non-disclosed materials, which Coinbase obtained through legal action. Among the documents is a May 2022 memo applying the Howey test to ETH 2.0. This analysis aimed to determine whether Ethereum 2.0 met security criteria.
A February 2023 email questioned ETH’s classification, despite its network transition. This message suggested ongoing confusion within the SEC. Coinbase says several emails from 2023 and 2024 further confirm internal debate continued beyond the Ethereum upgrade.
The emails indicate SEC officials still disagreed on Ethereum’s status even after the switch in consensus protocol. The agency’s classification of ETH remained unsettled, despite the project’s move to a staking model.
Memorandum Sheds Light on Official Decisions
In April 2023, the SEC produced a memorandum to guide its commissioners before approving a formal ETH 2.0 probe. Coinbase believes this document may show the agency’s regulatory stance before launching the investigation.
Additional 2024 emails suggest SEC lawyers discussed legal strategies and classification options into early 2024. Coinbase highlights this as further evidence of inconsistent internal policy.
The documents also show that ETH 2.0 passed the SEC’s internal “ecosystem” test. However, Coinbase claims the agency failed to explain why similar crypto assets were treated differently.
Ongoing Legal Challenge and Delayed Transparency
Initially, the SEC denied the FOIA request using Exemption 7(A), citing ongoing enforcement actions. But once the Ethereum 2.0 case closed without charges, the SEC admitted the exemption might no longer apply.
Despite this, the agency proposed a three-year timeline to review over 132,000 files for other exemptions. Coinbase criticized the delay, saying it obstructs regulatory clarity for digital assets.
Coinbase continues its legal battle, seeking full transparency. The exchange has also sued the SEC and FDIC for rejecting similar FOIA requests. These lawsuits challenge what Coinbase sees as regulatory overreach and a lack of consistent enforcement in the crypto sector.
Meanwhile, the SEC’s stance on ETH remains under scrutiny as pressure mounts for clarity in digital asset regulation.
