Coinspeaker Coinbase Counters SEC’s Attempt to Block Discovery from Chair Gary Gensler
The legal battle between Coinbase and the Securities and Exchange Commission (SEC), took a strange turn. The exchange has opposed the SEC’s motion to prevent access to documents from the agency’s Chair Gary Gensler.
This comes as part of Coinbase’s war against the SEC over crypto regulation. On July 3, it submitted a letter to the US District Judge Katherine Failla, arguing that Gensler’s insights could significantly influence the case. They believe that the SEC Chair’s communications about the regulatory status of cryptocurrencies and exchanges during his tenure are important to the exchange’s defense.
Coinbase’s chief legal officer Paul Grewal noted the company’s position on X. He stated that the SEC, not Coinbase, initiated the lawsuit. Therefore, the regulator should not hinder reasonable discovery from Gensler. Grewal wrote:
“Democracy, as well as due process, dies in darkness. We appreciate the Court’s careful consideration of this matter.”
Background
Last week, the United States-based exchange filed two lawsuits against the SEC and the Federal Deposit Insurance Corporation (FDIC). It alleged that the two agencies do not comply with Freedom of Information Act (FOIA) requests, aiming to compel them to release the requested information.
This fight’s primary matter is Coinbase’s subpoena for Gensler’s communications, which could shed light on his views regarding the regulatory landscape of digital assets. On June 14, Coinbase served Gensler with a subpoena demanding documents pertinent to the litigation.
Despite multiple meetings between the parties, the SEC has maintained that it does not represent Gensler in his personal capacity and has refused to provide the requested documents. Additionally, the SEC has not confirmed whether Gensler possesses any responsive communications in his personal capacity, as he has declined to search for such documents.
Coinbase responded to the judge that Gensler’s personal email is an “appropriate source of discovery.” They argue that Gensler’s extensive professional background and public statements have significantly influenced the understanding of crypto regulation.
Gensler had a strong background even before leading the SEC. He held important positions such as the Chair of the Commodity Futures Trading Commission (CFTC) and an academic role at MIT, where he lectured on blockchain technology and financial regulation.
Ripple Case as an Example
The crypto exchange also referenced the Ripple case in its filing. In that case, the court acknowledged that documents or communications do not need to be public to reflect the public’s understanding of regulatory requirements. It accepts that the agency personnel’s interactions with market participants and interagency correspondence are all relevant to the fair notice defense.
As the clash unfolds, Coinbase remains steadfast in its mission of transparency and accountability from the SEC, particularly from Gensler. The outcome of this case could have a major impact on the crypto industry regulatory framework.
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Coinbase Counters SEC’s Attempt to Block Discovery from Chair Gary Gensler