Coinbase’s Legal Challenge Against the SEC
The U.S. Securities and Exchange Commission (SEC) has formally requested that a court in New York dismiss a subpoena issued by Coinbase, which aims to compel the agency to disclose documents pertinent to cryptocurrency assets. The SEC has characterized the subpoena as encompassing “virtually all documents related to cryptocurrency assets in any capacity.”
SEC’s Opposition to the Subpoena
The motion submitted on Monday signifies a recent twist in the ongoing legal confrontation between the SEC and Coinbase. The cryptocurrency exchange is striving to summon the agency and its officials, including Chair Gary Gensler, to provide communications and other pertinent records that could bolster its defense.
The SEC has raised significant concerns regarding the demand for Gensler’s personal communications, labeling the subpoena as an overt violation of propriety. In a correspondence to the court dated June 28, the Commission contended that Judge Katherine Polk Failla of the Southern District of New York should reject Coinbase’s demands. Failla expressed confusion over the company’s insistence on Gensler’s personal communications, particularly those predating his role as SEC Chairman, and convened a telephone pre-trial conference on July 11 to address these conflicting demands.
Judicial Response and Coinbase’s Adjustments
During the July 11 conference, Failla indicated her astonishment regarding the motion, noting it was not a pleasant surprise. She deemed the arguments presented in the July 3 response to be bordering on absurd and found them unconvincing. Following this discussion, the Judge instructed Coinbase to refine its strategy, advising its legal team to file a motion to compel as an initial step toward resolving the discovery conflict. Coinbase complied by submitting its revised motion on July 23, slightly limiting the breadth of its request while upholding its core position.
Coinbase’s Struggle with Regulatory Bodies
In the previous year, the SEC initiated civil proceedings against Coinbase, alleging that the cryptocurrency exchange was operating without the necessary securities exchange registration, acting as an unregistered broker and clearing agency, and engaging in the unauthorized sale of securities through its staking offerings. In April, Coinbase filed its first request for document production from the SEC. Two months later, the exchange expressed its intention to subpoena Gensler’s personal communications regarding cryptocurrency from his entire tenure, including the four years prior to his appointment as SEC Chairman.
Moreover, Coinbase issued a similar subpoena to the Massachusetts Institute of Technology (MIT), where Gensler had taught a course on blockchain technology before assuming his role at the SEC. Recently, the company informed the court that it would retract its request for documents concerning Gensler’s activities outside the Commission.
