June 25, 2024

The SEC Ends Its Ethereum 2.0 Investigation, but Staking Isn't in the Clear - Ep. 665

1 hour 14 minutes

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

In this episode, Laura Brookover, senior counsel & 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 security, and why the SEC dropped the pursuit, including whether the shifting political winds played a role. For instance, how much of the decision was influenced by the ETH ETF approvals, Democrats crossing party lines to vote for FIT21 and the repeal of SAB 121, and/or SEC crypto enforcement chief David Hirsch’s resignation?

In this discussion, they also explained why the closure doesn’t necessarily mean that staking, or restaking, is safe from the SEC. Plus, what’s the impact of this closure on the other big crypto cases, such as Coinbase, Kraken, Uniswap, and Ripple?

Show highlights:

02:13 How Consensys managed to get the SEC to reveal that it had concluded its investigation into Ethereum 2.0, and the significance of that move

08:14 The SEC's possible reasoning behind investigating Ethereum after it had switched to proof of stake

15:19 How uncommon is it for the SEC to send a letter concluding an investigation like the one into Ethereum

18:45 Whether recent events around crypto as an election issue, the ETH ETF approvals, votes for FIT21 and the repeal of SAB121, and David Hirsch’s resignation, might be connected to the decision to close this investigation

29:03 Whether the Biden administration has shifted its stance on crypto and whether Gensler should remain as chair

33:24 How the SEC might still go after staking

37:18 Whether restaking, such as pioneered by EigenLayer, is safe from regulatory actions

39:13 Why the SEC might be pursuing different judgments in various jurisdictions for MetaMask and Coinbase Wallet

44:24 What crucial evidence from the closed Ethereum 2.0 investigation could strengthen Coinbase's defense in its ongoing lawsuit

47:58 Why the SEC's aggressive stance on various crypto enforcement actions seems to remain unchanged despite closing the Ethereum 2.0 investigation

52:13 Why Sam and Laura believe Solana should not be considered a security, despite the SEC naming it as such in various crypto cases

58:13 How the SEC’s argument about an “ecosystem” is nonsensical, according to Laura Brookover

01:00:31 What the implications of the closed investigation are for the cases of Kraken and Ripple

01:04:58 What Sam and Laura B. are watching out for in terms of regulation and ongoing legal cases

Visit our website for breaking news, analysis, op-eds, articles to learn about crypto, and much more: unchainedcrypto.com

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Guests:

Laura Brookover, Senior Counsel & Head of Litigation and Investigations at Consensys

Previous appearance on Unchained: Consensys’s Lawsuit Against The SEC: Will It End Gensler's ‘Unlawful Power Grab’?

Sam Enzer, Partner at Cahill Gordon & Reindel

Previous appearances on Unchained:

The Real Reason Why the SEC Might Be Going After Ethereum

How 'a Criminal Choice' Got Sam Bankman-Fried a 25-Year Prison Sentence

Why the SEC’s Case Against Coinbase Is So Significant for Crypto

Why SBF’s Testimony So Far Has Likely Already Doomed Him

Another Bad Week for Sam Bankman-Fried in His Criminal Trial

Why These Lawyers Say It’s Over for SBF-But His Only Hail Mary Is to Testify

SBF Trial: How Sam Bankman-Fried’s Lawyers Might Try and Win His Case

SBF’s Lawyers Could Be Annoying the Judge How Might That Impact the Trial?

For more links visit UnchainedCrypto.com

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By Laura Shin