SEC Ends Investigation into Ethereum 2.0, But Staking Unclear

SEC Won’t Pursue Enforcement Against Ethereum 2.0, But Why? What role did politics play? And what about staking and lawsuits involving companies like Consensys and Coinbase?

Posted June 25, 2024 at 12:00 PM EST.

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Last week, Consensys revealed that the SEC had concluded an investigation into Ethereum 2.0, referring to when Ethereum moved from a proof-of-work consensus mechanism to a proof-of-stake mechanism.

In this episode, Laura Brookover, Senior Attorney and Head of Litigation and Investigations at Consensys, and Sam Enzer, Partner at Cahill Gordon & Reindel, explore the implications of this decision on Ether’s status as a commodity versus a title, and why the SEC dropped the suit, including whether changing political winds played a role. For example, to what extent was the decision influenced by ETH ETF endorsements, Democrats crossing party lines to vote for FIT21 and the repeal of SAB 121, and/or the resignation of the leader of SEC Crypto Enforcement, David Hirsch?

During this discussion, they also explained why the shutdown does not necessarily mean that staking, or re-staking, is safe from the SEC. Additionally, how does this shutdown impact other major crypto cases, such as Coinbase, Kraken, Uniswap, and Ripple?

Show highlights:

• How Consensys managed to convince the SEC to reveal that it had concluded its investigation into Ethereum 2.0, and the importance of this decision
• The SEC’s possible reasoning behind investigating Ethereum after its move to proof of stake
• Is it rare for the SEC to send a letter concluding an investigation like the one into Ethereum?
• While recent events around crypto as an election issue, the ETH ETF approvals, votes for FIT21 and the repeal of SAB121, as well as the resignation of David Hirsch, could be linked to the decision to close this investigation.
• Has the Biden administration changed its stance on crypto and whether Gensler should remain president?
• How the SEC Could Still Proceed After Staking
• If the readjustment, such as that launched by EigenLayer, is sheltered from regulatory measures
• Why the SEC Could Pursue Different Judgments in Various Jurisdictions for MetaMask and Coinbase Wallet
• What Crucial Evidence From the Closed Ethereum 2.0 Investigation Could Bolster Coinbase’s Defense in Its Ongoing Lawsuit
• Why the SEC’s aggressive stance on various crypto enforcement actions appears to remain unchanged despite the closure of the Ethereum 2.0 investigation
• Why Sam and Laura think Solana should not be considered a security, although the SEC has designated it as such in various crypto cases
• Why the SEC’s ‘ecosystem’ argument is absurd, according to Laura Brookover
• What are the implications of the closed investigation for the cases of Kraken and Ripple
• What Sam and Laura B. are watching out for in terms of regulations and ongoing lawsuits

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Guests:

• Laura BrookoverSenior Attorney and Head of Litigation and Investigations at Consensys
• Sam Enzerpartner at Cahill Gordon & Reindel
  • Previous appearances on Unchained:

Connections

Ethereum “survives the SEC”

Consensys lawsuit against the SEC

Ether ETF

Latest on other SEC enforcement actions

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