The SEC opposes Coinbase’s request for SEC Chair Gary Gensler‘s internal communications in their ongoing legal battle.
In the most recent development in the ongoing legal dispute between the US Securities and Exchange Commission (SEC) and the American exchange Coinbase, the regulator has once again challenged what it considers to be an extraneous discovery request by the exchange.
The decision is a result of Coinbase’s insistence on receiving internal communications from SEC Chair Gary Gensler.
The SEC’s most recent motion, which was submitted on August 5, indicates that the regulator believes that Coinbase is currently exceeding its authority.
Therefore, it endeavors to obstruct Coinbase’s attempts to access this extensive collection of documents, which the agency considers to be at best irrelevant and excessive.
The SEC has criticized Coinbase for its requests for an excessive quantity of documentation. It contends that the request for internal and external communications concerning digital asset regulation is “overly broad.”
The agency also asserts that Coinbase’s requests for nearly three million additional documents are primarily disproportionate and would not contribute to the resolution of the case’s central issues.
According to the SEC, it has played along with Coinbase’s cadence of demands and continues to do so. That is, at least, to the best of its ability.
The commission reported that it has already generated more than 240,000 documents and is presently in the process of reviewing an additional 117,000 for pertinent subject matter.
Additionally, the SEC clarified the insignificance of the supplementary documents that Coinbase requested.
The commission observes that the aforementioned documents may be applicable to other domains; however, they do not explicitly address the Howey test or fair notice defense, which are likely to be the primary determinants of the case’s outcome.
Furthermore, the commission is concerned about the undue burden that the production of such a substantial volume of material would place on its resources. An excerpt from the most recent filing is as follows:
“The burden of searching, producing, or logging an additional three million documents is vastly disproportionate to the needs of the case.”
The latest motion by the SEC has prompted Coinbase’s Chief Legal Officer, Paul Grewal, to respond on social media by defending the request. Grewal is of the opinion that the sole method of demonstrating the SEC’s regulatory approach and inconsistencies regarding digital assets is to procure these documents.
He asserts that the action would significantly enhance transparency. This is particularly true in view of the SEC’s “regulation by enforcement” approach. The text of the X post is as follows:
“If the SEC is going to engage in an unprecedented regulation by enforcement campaign, the least they owe to those they target – and the public – is transparency.”
In June 2023, the Securities and Exchange Commission (SEC) filed a lawsuit against Coinbase, alleging that the company had been conducting securities transactions without registration for over four years. The legal dispute between the two parties was further exacerbated by the identification of 13 crypto assets as securities.
