Coinbase and the U.S. Securities and Exchange Commission (SEC) are engaged in an escalating legal conflict. On August 5, the SEC opposed Coinbase’s demand for additional documents and emails from SEC Chairman Gary Gensler. The SEC labelled Coinbase’s requests as “irrelevant” and excessively burdensome.
Why Did the SEC Oppose Coinbase’s Request?
The SEC contends that Coinbase’s document requests are unrelated to the ongoing Coinbase-SEC litigation. Coinbase sought documents from 17 additional custodians, aiming to uncover material pertaining to securities laws applied to certain altcoins. However, the SEC argued that these demands did not meet the relevance and proportionality standards set forth by Federal Rule of Civil Procedure 26(b)(1).
The SEC described Coinbase’s requests as a “fishing expedition with little marginal benefit” that would place a “tremendous burden” on the Commission. The SEC noted that a single meeting with FTX and a related “slide presentation” failed to justify such extensive document requests. Coinbase’s additional demands to support its “fair notice” defense were also dismissed by the SEC as insufficient grounds for broad discovery.
What Was the SEC’s Response to Coinbase’s “Gary Gensler” Request?
The SEC also denied Coinbase’s request for a sample of Chairman Gensler’s personal emails. The Commission argued that Gensler’s public statements were his own and not made on behalf of the Commission, and therefore did not warrant the intrusive search Coinbase proposed. The SEC asserted that such a search would be prejudicial and time-consuming.
Key Takeaways from the Legal Dispute
- SEC labelled Coinbase’s document requests as “irrelevant” and excessively burdensome.
- Coinbase sought documents from 17 additional custodians, deemed unnecessary by the SEC.
- SEC reviewed or produced approximately 357,000 documents, rejecting the need for 3 million more.
- SEC denied Coinbase’s request for Chairman Gensler’s personal emails, citing undue prejudice and time consumption.
The SEC highlighted its extensive efforts in the Coinbase-SEC case so far. The Commission stated it had reviewed or produced approximately 357,000 documents related to the matter. The SEC’s filing noted, “Reviewing and logging 3 million more documents cannot justify the fishing expedition burden.” It also mentioned that additional documents were likely privileged and unrelated to the Coinbase-SEC case.