Coinbase files lawsuit against SEC Chairman Gary Gensler, but the reason is criticized by the judge

Coinbase is working to acquire SEC Chairman Gary Gensler’s communications records to support its fair notice defense. However, this attempt was rejected by Judge Katherine Polk Failla during a hearing on July 11. During the hearing, Judge Failla noted that Coinbase’s request was unreasonable because it even included statements made by Gensler before he became SEC Chairman in 2021.

Coinbase's legal team argued that they needed Gensler to comment as soon as possible because there is currently no evidence that Gensler did not use a personal device or email account to discuss cryptocurrency or communicate with market participants. This argument is intended to demonstrate that the SEC may have taken a position on Coinbase that may have been influenced by Gensler’s personal opinions.

However, Judge Failla was skeptical, arguing that Coinbase’s claims were based on mere speculation and did not provide sufficient evidence to support its request. She made clear that obtaining Gensler’s pre-tenure statements would be a difficult task for Coinbase and argued that Coinbase’s request was not directly relevant to the case.

Still, Judge Failla showed sympathy for Coinbase's plight, saying she would be troubled if Coinbase's request was denied outright. This shows that the judge, while adhering to legal procedures, also took into account the special circumstances of the case and the rights of the company.

SEC opposes Coinbase subpoena request

Meanwhile, U.S. Securities and Exchange Commission (SEC) attorney Jorge Tenreiro strongly opposed Coinbase’s subpoena request for SEC Chairman Gary Gensler’s communications records, arguing that this action is intrusive to public officials. Tenreiro made it clear in court that the lawsuit should focus on the actions of the SEC as an institution, not what Gensler did as an individual. He further stated that Gensler was neither a fact witness nor an expert witness in the case, so Coinbase’s request was unreasonable and urged the court to dismiss it.

Judge Katherine Polk Failla expressed clear disapproval of SEC lawyer Jorge Tenreiro’s concerns about the investigative burden that could arise from Gensler’s pre-tenure statements, arguing that the size and depth of such an inquiry would be disproportionate. However, Coinbase’s lawyers countered that in the SEC’s case against Ripple, the court ordered searches of multiple SEC officials, including then-SEC Chairman Jay Clayton, suggesting that in some cases, obtaining the communication records of SEC officials is necessary. There is precedent.

In response, Tenreiro submitted a document in which he mentioned that the SEC had attempted to restrict Ripple’s access to certain information, including searches of SEC staff’s personal devices. This demonstrates the SEC's firm stance on protecting the privacy interests of its officials while also working to balance the line between regulatory responsibilities and personal privacy.

Coinbase Requests Subpoena for Key Documents and Communications

In June 2024, Coinbase took legal action and issued a subpoena to SEC Chairman Gary Gensler, requesting public comments, documents, and communications related to digital assets, platforms, and staking services. The materials include Gensler’s government statements, television appearances, public speeches and interviews on different occasions, spanning from May 2021 to September 2023, and even include communications before he became SEC chairman.

Coinbase’s request is broad, involving 33 SEC-related document and communication requests, as well as multiple requests targeting Gensler personally. This move was opposed by the SEC on June 28. The SEC asked the court to withdraw the subpoena against Gensler personally, arguing that it was too intrusive on personal privacy and irrelevant to the case.

However, Coinbase maintained in its response on July 3 that Gensler’s personal communications were critical to the company’s defense, particularly in relation to the fair notice defense. Coinbase claims that Gensler’s past public statements may have affected whether the company could have reasonably foreseen the SEC’s action, which is critical to the company’s legal position and strategy.

It is reported that the background of this legal battle is the lawsuit filed by the SEC against Coinbase in June 2023. The SEC alleged that Coinbase operated as an exchange, brokerage and clearing agency without registration, and engaged in unregistered securities issuance and sales activities through its staking services. Coinbase’s subpoena request is part of its aggressive defense in the lawsuit and aims to shed light on the SEC’s decision-making process and factors that may influence its regulatory actions.

Conclusion:

The legal dispute between Coinbase and the SEC highlights the tense relationship between the cryptocurrency industry and regulators. Coinbase sought to bolster its defense by obtaining records of SEC Chairman Gary Gensler’s communications, reflecting the company’s concerns about the SEC’s possible preconceived positions. However, the dissenting opinion of Judge Katherine Polk Failla and SEC attorney Jorge Tenreiro emphasized the protection of the privacy of public officials and the independence of the regulator's actions. This lawsuit not only involves the future of Coinbase, but also may have a profound impact on the regulatory environment of the entire cryptocurrency industry.

While Coinbase's request faces legal procedural challenges, it sheds light on the company's pursuit of a fair trial and transparency. At the same time, the SEC's position demonstrates the importance that regulatory agencies attach to the confidentiality of internal communications when performing their duties. As the litigation continues, all stakeholders are looking forward to a resolution that balances innovation, privacy and regulatory needs. Ultimately, this case could become a key precedent in shaping the regulatory framework for cryptocurrencies and protecting investor rights.

The above is the detailed content of Coinbase files lawsuit against SEC Chairman Gary Gensler, but the reason is criticized by the judge. For more information, please follow other related articles on the PHP Chinese website!