- The SEC has described a subpoena for Chair Gary Gensler’s communication records as “breathtakingly broad”
- Coinbase has filed the subpoena after a judge’s previous denial and criticism of their demands as “fatuous”
- The SEC argues that Gensler’s pre-chair communications are irrelevant to the case and should not be pursued
The US Securities and Exchange Commission (SEC) has complained that a subpoena for the communication records of its Chair Gary Gensler is “breathtakingly broad,” alleging that it wants “essentially all documents that in any way relate to crypto assets.” Coinbase filed the subpoena in the wake of a denial by the judge in the case last month over the same issue, where she criticized the demands, calling the arguments supporting it “fatuous.” The SEC has already argued that Gensler’s pre-chair communications are irrelevant to the case and so should not be sought.
Approval Would Set “Dangerous Precedent”
The SEC sued Coinbase last June, accusing it of selling unregistered securities. In response, Coinbase issued a subpoena targeting Gensler’s personal communications, a move the SEC swiftly challenged, and which resulted in a hearing last month. At the hearing, Judge Katherine Failla questioned the relevance of documents from Gensler’s time before becoming SEC Chair, a stance backed up by the agency’s senior trial attorney, Jorge Tenreiro, who also warned that permitting such subpoenas could set a dangerous precedent.
Kevin Schwartz, representing Coinbase, argued that these communications were pertinent, highlighting the SEC’s refusal to fully discuss the extent of documents Coinbase might hold.
Despite her skepticism, Judge Failla offered Coinbase a chance to present their arguments more thoroughly by filing a motion to compel, which is has since done, with the exchange arguing for the legitimacy of subpoenaing Gensler’s personal communications due to his influential role and public commentary on digital asset regulation.
Coinbase’s legal team maintained that understanding Gensler’s private discussions on regulatory matters was crucial for grasping the public and market participants’ views on regulatory requirements.
Gensler’s Private Comments Do Not Reflect Policy
In response, the SEC has complained about the nature and scope of the request, noting that it has produced over 240,000 documents concerning the crypto assets at issue and has “spent over 400 hours reviewing 64,000 documents to prepare a 648-page, 14,000-entry privilege log.” The agency added that Coinbase has been “wholly unable to justify the Subpoena,” alleging that it cut short meetings convened to discuss the issue.
The SEC has also argued that Coinbase shouldn’t be allowed to get even a sample of the communications as it has requested, arguing that a chairperson’s personal opinion is not indicative of agency policy.
