In a recent hearing, Judge Katherine Polk Failla criticized Coinbase’s attempts to subpoena SEC chair Gary Gensler in the ongoing case against the firm. She expressed concerns over the company’s request for Gensler’s statements prior to becoming SEC chair in 2021, calling Coinbase’s arguments “speculative” and not persuasive.
Coinbase’s lawyer defended the company’s request by stating that they seek Gensler’s earliest comments due to uncertainty about his use of personal devices or email accounts to discuss crypto or communicate with market participants. However, Failla pointed out that obtaining Gensler’s pre-chair statements would pose difficulty for the company.
SEC lawyer Jorge Tenreiro labeled Coinbase’s request as “incredibly intrusive” against a public official. He emphasized that the proceedings concern the SEC’s actions rather than Gensler’s personal communications. Tenreiro argued that Gensler is neither a fact witness nor an expert witness on the law, urging the court to quash Coinbase’s subpoena request.
Coinbase’s legal team cited the SEC’s case against Ripple, where the court ordered the discovery of multiple custodians, including then-SEC chair Jay Clayton. However, Tenreiro responded by highlighting an SEC filing seeking to prohibit Ripple from obtaining certain information by searching SEC staff’s personal devices. The judge expressed her strong views about the disproportionate burden of inquiry into Gensler’s pre-chair statements.
Coinbase requested documents and communications related to Gensler’s public comments on digital assets, platforms, and staking as a service. This included statements from May 2021 to September 2023, as well as his pre-chair communications. The company also lodged 33 other document requests concerning the SEC, in addition to various demands regarding Gensler.
The SEC sought to quash the subpoena against Gensler in a personal capacity, arguing that his personal communications are not relevant to the case. However, Coinbase countered by stating that Gensler’s past statements could impact their fair notice defense, as it would determine whether the company could reasonably expect the SEC to take action against them.
The SEC initiated a lawsuit against Coinbase in June 2023, alleging that the firm operated as an unregistered exchange, broker, and clearing agency. The regulator also accused Coinbase of engaging in unregistered offerings and sales of securities through their staking-as-a-service offerings.
The legal battle between Coinbase and the SEC continues to unfold, with Judge Failla criticizing Coinbase’s subpoena request in the ongoing case. The debate over the relevance of Gensler’s personal communications and the comparison to past legal precedents adds complexity to the case, highlighting the intricacies of regulatory disputes in the cryptocurrency industry.