Anika Begay
In an escalation between Coinbase (NASDAQ: COIN) and the U.S. Securities and Exchange Commission (SEC), the crypto exchange stepped up its efforts on Monday, August 12, pushing for the SEC to release internal documents. This filing, a Reply Memorandum of Law from Coinbase, supports their motion to compel the SEC to fulfill its discovery obligations.
Last week, the SEC opposed Coinbase’s requests, which include the release of SEC Chairman Gary Gensler’s personal cryptocurrency-related emails, in a memo in New York’s Southern District Court. The SEC described the requests as “shockingly broad,” arguing that they are unnecessary and place an undue burden on the regulator.
Coinbase Doesn’t Backtrack
Coinbase’s response criticizes the SEC for failing to conduct a thorough search of non-Division of Enforcement personnel records, including those of SEC commissioners and the Division of Trading and Markets, which were not sought or produced. “After weeks of refusing to prepare a preliminary ‘hit report’ as a basis for constructive discussion, the SEC has now acceded to this threshold request, seeking to use those hit-report findings to disrupt, rather than facilitate, an informed discovery protocol,” Coinbase said in the memo.
The filing also accuses the SEC of being selective in its document discovery and production processes, saying the SEC overstated the burden of production by four times. Coinbase challenges the SEC’s reluctance to review documents from outside its Enforcement Division, pointing to the relevance of several disclosures highlighted in other legal cases, such as the Ripple case.
A significant point of contention remains the SEC’s refusal to ask whether Chairman Gensler uses his personal email for communications relevant to the issues at the heart of the case. “Finally, with respect to Chairman Gensler, the SEC refuses to even ask whether he receives or sends relevant communications on his personal email. The opposition offers no basis for this refusal,” the filing states. The cryptocurrency exchange insists that Gensler’s personal communications may contain critical information relevant to the case and argues that the SEC’s refusal to ask about these communications is unjustifiable.
Coinbase also criticizes the SEC for dismissing the relevance of documents that could support the due notice defense. “The SEC should be ordered to conduct searches related to Coinbase’s due notice defense… Having declared this defense ‘effectively dead’ and waived any such searches ‘unless and until’ the Court confirmed that it was ‘still in the case,’ the SEC now has that confirmation but persists in asserting the categorical irrelevance of the documents,” the exchange argues.
Additionally, Coinbase is requesting that the SEC register all documents reviewed and withheld, as required by a court order implementing Rule 502(d). This request highlights the need for these actions to ensure due process of law, with the exchange set to confer with the SEC to finalize the details of the research protocol.
At press time, COIN was trading at $191.74.
Featured image from Egn-aquitaine, chart from TradingView.com
