KEY POINTS
- The SEC sued Coinbase in 2023, accusing it of offering unregistered securities services
- Coinbase said the regulator's 'blanket claims of privilege are improper'
- The SEC previously said Coinbase can't force it to engage in new rulemaking for crypto
The heated legal battle between the U.S. Securities and Exchange Commission (SEC) and cryptocurrency exchange giant Coinbase ensues, and in the latest twist of events, Coinbase asked the court to make the regulator produce documents that it said should help with its defense.
How it started
The Wall Street regulator sued Coinbase in mid-2023, accusing the crypto titan of operating as an unregistered securities exchange and alleging that Coinbase's staking services were equal to offering unregistered securities.
Since then, the parties have been exchanging filings, with Coinbase vowing to defend itself and refusing the regulatory agency's claimed regulatory authority over digital assets. It recently filed a lawsuit accusing the SEC of seeking to "destroy" the burgeoning sector.
"The SEC has waged a scorched-earth enforcement war on digital-asset firms, in conjunction with efforts by other financial regulators to de-bank crypto firms, is designed to cripple the digital-asset industry," it said.
How it's going
On Tuesday, Coinbase filed a motion to compel the SEC to produce documents that it deems are essential in its defense. It said the SEC has refused "to search for, and produce or log, relevant information going to the core claims and defenses in this litigation."
As per the filing, the SEC insists that documents outside its investigatory files are irrelevant to the case and it has also refused to produce such documents on the grounds of privilege and burden. "Neither the SEC nor Chair [Gary] Gensler has made any effort to substantiate their claims of 'burden.' And their blanket claims of privilege are improper," Coinbase said in the filing.
In particular, Coinbase wants the regulator to produce documents "concerning the named tokens and services and the application of the securities laws to digital assets," files regarding Coinbase's public offering, and documents "concerning Chair Gensler's speeches on the regulatory status of digital assets and digital asset exchanges."
How will it end?
The stakes are high in the SEC's case against Coinbase. The ending has yet to be known, but it appears the battle will drag on for months more, and even years, especially as it involves the crypto company's request that the SEC draw up new rulemaking specifically dedicated to the digital assets industry.
The SEC has informed the court that Coinbase can't force it to establish new rules since its existing securities laws are enough to regulate the sector.
The SEC’s determination to undertake an aggressive enforcement campaign without clarity on the rules themselves puts digital asset firms of all sizes in a regulatory conundrum – cease operations in the US or face indiscriminate enforcement. 3/5
— paulgrewal.eth (@iampaulgrewal) July 10, 2024
Paul Grewal, Coinbase's chief legal officer, has repeatedly called out the SEC for its "aggressive enforcement campaign" against the industry without providing regulatory clarity. The crypto company has also vowed to continue its work in getting transparent and clear regulations for the industry.
