The Coinbase crypto officer published the internal communication of the US Securities and Exchange Commission (SECs), in which the New York Prosecutor General’s Office (NYAG) recommended that the department classify the ether as a security during the trial of the Kucoin exchange in 2023.

Documents released by Coinbase, in accordance with the Law on Freedom of Information, include an email from the head of the Bureau for the Protection of Investors in NYAG Shamiso Maswoswe, addressed to the former chairman of the SEC Gary Gensler. The prosecutor’s office demanded that the SEC indicate the status of the ether as a security in order to maintain the position of the department in the trial with Kucoin.

The Kucoin case ended in December 2023, when the exchange agreed to resolve the charges of violating laws on securities and the lack of registration as a broker-dealer. Kucoin paid a fine in the amount of $ 22 million. A clear classification of the status of the ether would not determine the outcome of the case, since the New York state regulates both securities and goods. However, this would help to achieve a decision of the court confirming the ETH status as a security, which would contribute to the protection of investors, NYAG claimed.

And yet, the SEC adhered to an ambiguous position in relation to ETH. Earlier, the department made it clear that the broadcast could be the category of goods. After the Ethereum transition to another consensus algorithm Proof-OF-Stake (POS), disagreements regarding whether this cryptoactive can fall under the laws of securities, intensified. Therefore, the SEC did not officially call ETH security and refrained from any statements about the status of ETH in the case against Kucoin.

Materials published by the Coinbase exchange also include emails and internal notes regarding discussions of the classification of other crypto assets. This also includes correspondence about the cryptocurrency Ripple (XRP). In one of the letters from 2021, SEC employees discussed whether the Ripple blockchain was decentralized.

With the arrival of the new administration of President Donald Trump, the SEC took a more friendly position in relation to digital assets. Now, Paul Atkins, the chairman of the department, was approved. The regulator has already begun public discussions regarding the regulation of decentralized finance (Defi) and asset tokenization. This year, SEC stated that memecoons and stablecoins are not considered securities.