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Crypto exchange Coinbase filed a motion to compel the Securities and Exchange Commission to produce internal communications on its discussions about crypto, including the messages of Chair Gary Gensler.
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The company backed off from a more aggressive earlier effort to seek Gensler’s communications, having demanded documents from before he started work at the agency.
Coinbase Inc. (COIN) is going after internal chatter at the U.S. Securities and Exchange Commission (SEC) that may shed light on its pursuit of cryptocurrency exchanges as illegal enterprises – including Chair Gary Gensler’s own communications – but the scope of its latest request filed on Tuesday has been dialed back after resistance from a federal judge.
The company heard the message from Judge Katherine Polk Failla, of the District Court for the Southern District of New York, that she thought Coinbase was going too far in its demands for years of communications from the SEC chief that included messages before he showed up to run that agency. Coinbase Chief Legal Office Paul Grewal said its Tuesday motion is responding to the judge’s points from a hearing earlier this month, but it still seeks the chairman’s correspondence on crypto, any discussions within the various divisions of the SEC and what the agency officials may have talked about before approving Coinbase as a public company.
“What we’re asking for here, ultimately, is transparency into how the SEC has gone about its business,” Grewal said in an interview with CoinDesk. “We think government transparency, by and large, is a good thing. When you’re sued by that government in a case they chose to bring, we think it’s even more important that we have full line of sight into documents that could bear on our case.”
The regulator will have a chance to respond by next month, though Tuesday’s motion claims the SEC “refuses to search any document outside of a self-selected group of Enforcement Division investigatory files” and won’t ask Gensler “whether he used his personal email for communications about his public statements on these subjects.”
The SEC’s enforcement action against Coinbase accused the company of offering unregistered securities and running an unregistered exchange. The company denies that the tokens being traded were securities and that its exchange falls under SEC rules, though it also argues the regulator has made a mess of outlining industry standards. Coinbase has also sued the SEC on the latter point, and the resolution of all the exchange’s legal disputes could be central to resolving U.S. crypto policy.
Gensler’s personal view on crypto is central to Coinbase’s argument that the agency has been inconsistent with how it’s tried to direct the industry to comply with securities laws, Grewal said. But when the company sought to subpoena Gensler’s private communications, the judge said Coinbase was acting inappropriately.
Jorge Tenreiro, an SEC senior trial attorney, argued at a July 11 hearing that Gensler’s communications before he became chair were not relevant to the case.
The new motion seeks anything he said to anybody while at the SEC, including in a private capacity.
“Both the SEC and Mr. Gensler should be ordered to produce relevant documents about Mr. Gensler’s public statements; and as to Mr. Gensler, if there are no relevant documents and communications in his personal email, he should say so,” the motion argued.