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In response to the Securities and Exchange Commission’s move to restrict “reasonable discovery” from Gary Gensler, the agency’s chair, the Coinbase cryptocurrency exchange has rebelled in the company’s continuous legal conflict with the SEC.
Coinbase’s Defense Against SEC’s Discovery Block
“We have responded to SEC’s effort to block reasonable discovery from Mr. Gensler in a case that it — not Coinbase — chose to file. Democracy, as well as due process, dies in darkness. We appreciate the Court’s careful consideration of this matter,”, Paul Grewal, chief legal officer of Coinbase, noted in an X post today.
Coinbase’s attorney, in a letter sent on Wednesday to U.S. District Judge Katherine Failla, claimed the sought-after discovery from Gensler is pertinent. Coinbase said, “Mr. Gensler’s communications concerning the regulatory status of digital assets and exchanges during his tenure as Chair go to the heart of Coinbase’s fair notice defense.”
Coinbase asked Gensler to create records on the communications it said were pertinent to the investigation in June; in April, it asked for documentation on the SEC. That would comprise records on cryptocurrency from 2017 to the present, spanning the four years prior to Gensler’s April 17, 2021 swearing-in.
SEC vs. Coinbase: The Battle Over Gensler’s Emails
In a June 28 letter to the judge, the SEC said that Coinbase asked to review Gensler’s personal emails in order to ascertain whether he used them to express his opinions on federal securities laws and crypto assets. “The SEC rejected this posture and proposal,” the letter added.
“The subpoena should be directed at the SEC,” the agency claimed in the paperwork.“To the extent it is not, it is an improper intrusion into a public official’s private life, based on his decision to serve. Given also the utter lack of relevance of the requested documents, and the potential chilling effect on public service, the Court should quash the Subpoena and issue a protective order.”
On Wednesday, Coinbase answered in the filing to the judge that Gensler’s personal email is “an appropriate source of discovery.”
Coinbase contended in the letter, “What Mr. Gensler was saying in his private communications about the regulatory status of digital assets and what market participants were saying to him about these matters is probative of the objective understanding of the public and market participants regarding what behavior the securities laws prohibit.”
The crypto exchange also mentioned the example of Ripple in the paperwork.“As the Ripple court confirmed, a document or communication need not be public to provide insight into the public’s objective understanding as to what regulators require of them: agency personnel’s communications with market participants and interagency correspondence are all ‘relevant to the fair notice defense,’”Coinbase said.
Coinbase sought a court order to compel the Federal Deposit Insurance Corporation and the SEC to comply after last week filing two cases against them for failing Freedom of Information Act requests.
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