Tag: coinbase

The U.S. Securities and Exchange Commission (SEC) has asked a New York court to reject Coinbase’s subpoena, which seeks to compel the agency to produce documents related to crypto assets.

The SEC described them as covering “essentially all documents that in any way relate to crypto assets.”

SEC Opposes Coinbase’s Subpoena Request

The motion filed on Monday represents the latest development in the legal battle between the SEC and Coinbase. The exchange is attempting to subpoena the agency and its employees, including Chair Gary Gensler, for communications and other records that could aid its defense.

The SEC has particularly objected to the request for Gensler’s personal communications, labeling the subpoena as a blatant impropriety.

In a letter to the court on June 28, the Commission argued that Judge Katherine Polk Failla of the Southern District of New York (SDNY) should deny Coinbase’s request. Failla, perplexed by the company’s demand for Gensler’s personal communications, particularly those before his tenure as SEC Chairman, held a pre-trial conference by phone on July 11 to discuss the conflicting requests.

Failla remarked that she was surprised by the motion during the July 11 conference, and not in a good way. She found the arguments, as articulated in the July 3 response, to border on the fatuous and was not moved by any of them.

Following the conference, the Judge directed Coinbase to refine its approach, instructing its lawyers to file a motion to compel as a preliminary step in resolving the discovery dispute. Coinbase complied and submitted its motion on July 23, slightly narrowing the scope of its request but maintaining its fundamental stance.

Coinbase’s Ongoing Fight with SEC

Last year, the SEC filed civil charges against Coinbase, accusing the crypto exchange of operating as an unregistered securities exchange, broker, and clearing agency and with the unregistered sale of securities in connection with its staking products.

In April, the exchange submitted its first request for the production of documents to the SEC. Two months later, Coinbase indicated its intention to subpoena Gensler’s personal communications related to crypto from his entire tenure, including the four years before his appointment as SEC Chairman.

Additionally, Coinbase served a similar subpoena to the Massachusetts Institute of Technology (MIT), where Gensler taught a blockchain technology class before joining the SEC. Recently, the company informed the court that it would no longer seek records related to Gensler’s role outside the Commission.

The largest United States cryptocurrency exchange, Coinbase, has filed lawsuits against the Securities and Exchange Commission (SEC) and the Federal Deposit Insurance Corporation (FDIC) for failing to comply with information requests in closed crypto cases.

According to filings at the United States District Court for the District of Columbia, Coinbase seeks to compel the SEC and FDIC to comply with the Freedom of Information Act (FOIA) to respond to information requests from industry participants.

Coinbase Sues SEC and FDIC

Coinbase argues that the SEC has taken a new position, claiming sweeping authority over the growing crypto sector. While the SEC’s claims have no basis in securities laws, the agency has failed to explain properly and, instead, waged an enforcement war against crypto firms.

The exchange said the regulator’s joint effort with other financial watchdogs, like the FDIC, to de-bank crypto firms is aimed at crippling the digital asset industry.

Coinbase and professional services research firm History Associates have requested that the SEC prove its authority over the crypto space by providing records concerning three investigations into such firms and entrepreneurs. One of the investigations is focused on Ethereum’s native asset, Ether, which the SEC said was not a security in 2018.

Last week, the agency closed its investigation into Ethereum 2.0, the proof-of-stake network, suggesting that Ether is still not a security. Although the other investigations had been closed for years, the SEC withheld all records based on the three cases. Coinbase claims the refusals violated the regulator’s FOIA obligations.

“The SEC’s new, opaque, and shifting view of the securities laws deprives regulated parties of the fair notice demanded by due process, leaving them to guess whether the SEC might view their activities as securities transactions and decide to subject them to investigation, prosecution, and backward-looking penalties,” Coinbase insisted.

SEC’s Ongoing Suit Against Coinbase

Coinbase’s chief legal officer, Paul Grewal, further revealed that the FDIC stonewalled requests for letters telling financial institutions to pause crypto-related activities indefinitely. Interestingly, the FDIC’s Office of Inspector General has criticized such actions in the past, claiming that they would limit financial innovation and growth in the crypto space.

“This is no way to regulate. And this is no way to operate a transparent government. Today, we demand better from our financial regulators. We appreciate the Court’s attention to these important issues and look forward to sharing updates in the future,” Grewal stated.

Meanwhile, the SEC has an ongoing lawsuit against Coinbase, arguing that the firm operates an unregistered securities exchange.