During a hearing on July 11, Judge Katherine Polk Failla expressed doubts about Coinbase’s attempts to subpoena SEC Chair Gary Gensler in the ongoing case against the cryptocurrency exchange. The hearing highlighted Coinbase’s persistent efforts to obtain Gensler’s communications, including statements made before he assumed the role of SEC Chair in 2021. Judge Failla seemed unconvinced by Coinbase’s arguments, stating, “You’ll have a hard row to hoe on that. I find your arguments speculative.”
Coinbase’s legal team defended their actions by claiming that they could not gather necessary information from the SEC, thus leading them to seek Gensler’s pre-Chair communications to strengthen their fair notice defense. Despite their efforts, Judge Failla dismissed their argument, urging them to reconsider their approach. She pointed out, “Even the period when he’d been Chair, they say no. We tried to engage with Mr. Gensler and the SEC, but they’ve refused to say he didn’t use his personal device to communicate about crypto.”
Judge Failla emphasized that she did not find Coinbase’s arguments persuasive and suggested that they focus on alternative strategies. She acknowledged the importance of Gensler’s role in shaping public understanding of cryptocurrency but also expressed concerns about the burden of inquiry into his statements before assuming the Chairmanship. She directed Coinbase to proceed with a motion to compel, indicating that further discussions with the SEC were necessary.
The SEC’s legal representative, Jorge Tenreiro, argued against the subpoena, highlighting the intrusive nature of the request directed at a public official. Tenreiro emphasized that officials have important duties and that the focus should be on the SEC’s actions rather than individual actions. He stated, “Before they ask us to pick up his personal phone, show us.” Tenreiro also noted that Gensler was neither a fact witness nor an expert witness on the law, further supporting the SEC’s position.
The dispute between Coinbase and the SEC originated in June when Coinbase requested documents and communications related to Gensler’s public comments on digital assets, platforms, and staking services from May 2021 to September 2023. The request also included 33 other demands for documents and communications regarding the SEC’s actions. Following the agency’s motion to quash the subpoena against Gensler on June 28, Coinbase asserted the relevance of his personal communications to its fair notice defense on July 3.
The legal battle between Coinbase and the SEC showcases the complexities and challenges involved in seeking information from high-ranking government officials. While Coinbase is adamant about obtaining Gensler’s communications to strengthen its defense, the SEC remains wary of the potential intrusiveness and disproportionate burden of such requests. The outcome of this case will likely have significant implications for how companies interact with regulatory bodies in the cryptocurrency space in the future.