Coinbase constrains subpoena of sec chair gensler's crypto correspondence

Coinbase Constrains Subpoena of SEC Chair Gensler’s Crypto Correspondence

Last Updated: July 26, 2024By

Coinbase Inc. (COIN) is scaling back its demands for internal communications from the U.S. Securities and Exchange Commission (SEC), which may illuminate the regulatory scrutiny surrounding cryptocurrency exchanges. This reduction follows pushback from a federal judge. The revised request, filed on Tuesday, continues to seek correspondence from SEC Chair Gary Gensler regarding cryptocurrency matters, alongside communications within various SEC divisions and discussions prior to Coinbase’s public company approval.

Read more: Grayscale Moves $1 Billion in Ether to Coinbase Ahead of Spot Ether ETF Debut

Judge Katherine Polk Failla of the Southern District of New York cautioned Coinbase, suggesting that its initial request, which included years of communications from Gensler—even prior to his tenure at the SEC—was overly extensive. Coinbase’s Chief Legal Officer, Paul Grewal, stated that the motion addresses the judge’s concerns from an earlier hearing but maintains a focus on obtaining Gensler’s correspondence related to cryptocurrency, as well as internal SEC discussions on the subject.

Grewal emphasized the importance of transparency, particularly when a government entity is prosecuting a case against the company. “We believe that government transparency is fundamentally beneficial. When that government brings a lawsuit, it is even more crucial for us to have comprehensive access to documents pertinent to our case,” Grewal told CoinDesk.

The SEC has until next month to respond, although Coinbase’s motion asserts that the regulator is limiting its search to a narrowly defined set of Enforcement Division files and is unwilling to query Gensler regarding the use of his personal email for relevant communications.

The SEC’s enforcement action against Coinbase alleges that the company offered unregistered securities and operated an unregistered exchange. Coinbase disputes these claims, arguing that the traded tokens do not qualify as securities and that its exchange is not subject to SEC regulations. The company also contends that the SEC has failed to clearly define industry standards, leading to additional litigation against the regulator. The resolution of these legal disputes could be pivotal in shaping U.S. cryptocurrency policy.

Gensler’s personal stance on cryptocurrency is central to Coinbase’s argument that the SEC’s approach has been inconsistent. However, the attempt to subpoena Gensler’s private communications has been challenged as overreaching. At a July 11 hearing, SEC Senior Trial Attorney Jorge Tenreiro argued that communications from Gensler’s time before assuming the role of chair were not pertinent to the case.

The revised motion now seeks access to any communications Gensler made while at the SEC, including those made in a private capacity. “Both the SEC and Mr. Gensler should be compelled to produce documents related to Mr. Gensler’s public statements. If no relevant documents exist in his personal email, he should confirm this,” the motion asserts.

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About the Author: Eunji Lim

Eunji lim

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