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Coinbase seeks regulatory documents in SEC lawsuit

Posted on by darion

In short

  • Coinbase has filed a motion to compel the SEC to release documents, including Gary Gensler’s private communications from when he served as SEC Chairman.
  • The company says the documents are key to its defense against SEC allegations that it operates as an unregistered securities exchange.
  • Coinbase wants information about SEC discussions with other market participants and documents related to its 2021 IPO.
  • The SEC declined to seek the documents outside its Enforcement Division, citing their lack of adequacy and undue burden.
  • This filing is part of Coinbase’s ongoing legal battle with the SEC, which sued the company in June 2023.

Cryptocurrency exchange Coinbase has taken a new step in its legal battle with the U.S. Securities and Exchange Commission (SEC). The company has filed a motion to compel the SEC to produce documents it believes are crucial to its defense.

The motion, filed in the U.S. District Court for the Southern District of New York, seeks several types of documents. They include private communications from SEC Chairman Gary Gensler from his time at the SEC, which began in 2021.

Coinbase also wants information about SEC staff discussions with other market participants and documents related to Coinbase’s 2021 IPO.

This legal action is part of a larger conflict between Coinbase and the SEC. In June 2023, the SEC sued Coinbase. The regulator accused the company of operating as an unregistered stock exchange since 2019.

The SEC also alleged that Coinbase permitted illegal trading of unregistered securities on its platform.

Coinbase says the requested documents are important to its defense. The company believes the materials may indicate that the SEC did not previously consider Coinbase’s operations to violate securities laws. Coinbase also believes the documents may support its claim that it did not receive a fair warning of any violations.

Paul Grewal, Coinbase’s general counsel, explained the company’s position on social media. He said, “We have a right to know all the cards the other side has.” Grewal added that Coinbase is not trying to play “Texas Hold ‘Em with all of its cards face down.”

The SEC, however, has denied those requests. The regulator says it will not seek documents beyond the Enforcement Division’s investigative files. The SEC says those other documents are not relevant and that seeking them would be too laborious.

Coinbase disagrees with the SEC’s position. In its filing, the company called the SEC’s position “untenable.” Coinbase wants the court to force the SEC to conduct a thorough search and either produce the requested documents or explain why they can’t be released.

Coinbase’s latest move is a narrower version of an earlier request. In April, the company asked for Gensler’s private communications from before he became SEC chairman. After some resistance, Coinbase has now limited its request to Gensler’s communications from when he was chairman.

The conflict between Coinbase and the SEC is part of a broader debate about how cryptocurrencies should be regulated. Coinbase argues that the SEC does not have the authority from Congress to regulate digital assets. The company also says it did not receive fair notice that it might be breaking any rules.