Coinbase is asking a New York court to order the U.S. Securities and Exchange Commission to hand over documents involving internal discussions made by Chair Gary Gensler. 

The crypto exchange filed a motion to compel Gensler and the SEC to provide documents that Coinbase says are at the heart of its litigation with the agency, in a court document filed on Tuesday.  

Years before the SEC sued Coinbase, the agency's commissioners and staff met with crypto market stakeholders, including Coinbase, and posted public statements and guidance about crypto regulation, Coinbase said in its motion on Wednesday.

"Documents related to these communications bear directly on the SEC’s claims and on Coinbase’s fair notice defense," Coinbase said. "The SEC will not search for these relevant documents. It refuses to search any documents outside of a self-selected group of Enforcement Division investigatory files. And it refuses a produce-or-log protocol for any custodian email searches. That extends to Chair Gensler’s SEC emails, and even to asking Chair Gensler whether he used his personal email for communications about his public statements on these subjects that he said were made in his personal capacity."

The SEC and Coinbase have been embroiled in a lawsuit since last year when the agency sued Coinbase for operating its platform without registering. Coinbase then moved to dismiss that lawsuit, but U.S. District Judge Katherine Polk Failla of New York later shut it down. The lawsuit is now in the discovery process. 

Coinbase is asking the court to compel the agency to produce certain documents related to the tokens that were a part of the SEC's complaint, documents concerning the SEC's deliberation of Coinbase becoming a public company in April 2021, and statements that Gensler made personally and professionally during his time at the SEC. 

"We have a right to defend ourselves, and if they are talking to these token issuers about the law, the lawful status of their projects or the scope or reach of the federal securities laws as it applies to their blockchain networks — we're entitled to it, and that's what we're looking for," said Paul Grewal, chief legal officer at Coinbase in an interview with The Block. 

Grewal added that it's important for the market to know if there were contradictory documents or statements the SEC made about how federal securities laws apply to crypto. 

Coinbase served Gensler with a subpoena in June, asking the chair to produce documents concerning certain communications that the exchange said were relevant to its ongoing case with the SEC. Those documents included statements about crypto from 2017 to the present, covering the four years before Gensler was sworn in in 2021. 

Last week, Coinbase scaled back that subpoena to include only Gensler's emails and communications during his time as chair of the SEC. 

During a court hearing in July, U.S. District Judge Katherine Polk Failla of New York raised concerns about a July 3 letter Coinbase filed arguing that Gensler's personal emails about crypto were "an appropriate source of recovery."

Ultimately, Judge Failla said she "was just not moved by basically any of the arguments" that Coinbase made in the letter. She eventually decided it would be best for Coinbase to file a motion to compel. 

Source : The Block Crypto News - Jul 24, 2024