The U.S. Securities and Exchange Commission has raised concerns about Coinbase’s extensive subpoena requests targeting agency Chair Gary Gensler’s records. The SEC accused Coinbase of overreaching in its attempts to gather information related to cryptocurrencies.
The SEC’s legal team has challenged Coinbase’s broad subpoena requests as they seek “essentially all documents that in any way relate to crypto.” This latest development is part of an ongoing legal battle between the SEC and Coinbase over allegations of securities law violations by the U.S. exchange.
Last year, the SEC filed civil charges against Coinbase, claiming that the crypto exchange operated as an unregistered securities exchange, broker, and clearing agency. Additionally, the SEC accused Coinbase of engaging in the unregistered sale of securities in connection with its staking products.
In response, Coinbase served the SEC with a document production request in April. Subsequently, Coinbase informed the SEC of its plans to subpoena Gensler’s personal communications related to cryptocurrencies, dating back four years before his appointment as Chairman. A similar subpoena was also sent to the Massachusetts Institute of Technology (MIT), where Gensler previously taught a blockchain technology class.
However, Coinbase recently decided not to pursue records outside of Gensler’s role at the SEC. The SEC criticized Coinbase’s request for Gensler’s personal communications, labeling it as a “blatant impropriety.” District Judge Katherine Polk Failla of the Southern District of New York expressed surprise and skepticism regarding Coinbase’s motion during a pre-trial conference on July 11.
Failla instructed Coinbase to submit a motion to compel, signaling the beginning of negotiations to resolve the discovery dispute. Following the conference, Coinbase revised its motion on July 23, narrowing the scope of its request but maintaining its position.
The SEC’s resistance to Coinbase’s subpoena requests underscores the contentious nature of the legal proceedings between the regulator and the crypto exchange. The outcome of this dispute will likely have significant implications for the regulation of digital assets in the United States.
In conclusion, the clash between the SEC and Coinbase highlights the complexities and challenges of regulating the rapidly evolving cryptocurrency market. As the legal battle continues, both parties are gearing up for a protracted and closely watched courtroom showdown that could shape the future of crypto regulation in the U.S.