In the ongoing legal battle between cryptocurrency exchange Coinbase and the U.S. Securities and Exchange Commission (SEC), Coinbase’s chief legal officer Paul Grewal has taken to social media platform X to express his concerns about the SEC’s attempt to block discovery of SEC Chairman Gary Gensler’s communications. The legal standoff centers around a subpoena issued to Gensler, demanding documents of the SEC Chairman’s communications, both within and outside of his role at the SEC.
Coinbase Puts Gensler Under the Microscope
Grewal declared“We have responded to the SEC’s effort to prevent Mr. Gensler from disclosing reasonable information in a case that it, not Coinbase, chose to file. Democracy, as well as due process, dies in the dark. We appreciate the Court’s careful consideration of this issue.”
Coinbase’s legal challenge focuses on acquiring communications from Gensler’s tenure as a prominent regulator and academic commentator, claiming that his dual roles profoundly influenced the understanding and regulatory framework for digital assets. Their official response to the SEC’s motion to quash the subpoena states that “Over the past 15 years, Mr. Gensler has been not only the most prominent regulator, but also the most vocal academic commentator, regarding the regulatory status of digital assets and exchanges.”
The documents requested in the subpoena are described as critical to understanding whether Coinbase had a reasonable opportunity to learn how securities laws applied to its operations. The letter argues the relevance of these communications, stating that “Mr. Gensler’s communications regarding the regulatory status of digital assets and exchanges during his tenure as Chairman are of central concern to Coinbase.” fair notice defense.”
It stresses the need for these documents to determine whether Coinbase, “a person of ordinary intelligence,” had “a reasonable opportunity to know” what the securities laws and those charged with enforcing them prohibit with respect to secondary sales digital assets.
Coinbase also highlighted the SEC’s inconsistency, noting that the agency has previously argued in similar contexts that regulators’ private communications are relevant. The letter cites precedent: “As the Ripple court confirmed, a document or communication need not be public to provide insight into the public’s objective understanding of what regulators expect of them: agency staff’s communications with market participants and interagency correspondence are all ‘relevant to the fair notice defense.’”
This comparison is intended to strengthen the argument that Gensler’s private emails and communications could shed light on his personal interpretations and the advice he may have offered informally regarding digital assets.
Coinbase’s letter notes that these communications may contain critical information about the SEC’s approach and Gensler’s personal views, which may differ from its public and official positions. The letter asserts that the SEC’s refusal to confirm the existence of such documents only increases the need for their disclosure, arguing that without them, Coinbase is unable to fully articulate its defense based on fair notice.
At press time, COIN was trading at $224.94.
Featured image from Medium, chart from TradingView.com
