KEY POINTS
- The SEC said it may need to cough up over 3 million documents to suffice Coinbase's demands
- The regulator also strongly pushed back on providing Gensler's emails, saying the demand was "prejudicial"
- Coinbase's Grewal said the SEC should at least be transparent to the crypto firms it targets
The fierce legal battle between the U.S. Securities and Exchange Commission (SEC) and cryptocurrency exchange giant Coinbase continues as the regulator claimed that the exchange's "sweeping" discovery document demands were too much.
Coinbase's motion to compel
Late last month, Coinbase filed in court a motion to compel the Wall Street regulator to produce documents it deems are necessary to help with its defense in the lawsuit lodged by the SEC.
The crypto titan said at the time that neither the regulator nor its Chair, Gary Gensler, "made any effort to substantiate" their claims that providing more discovery documents would be too burdensome.
SEC blasts Coinbase's motion
In a Monday filing, the SEC said it already produced 240,000 documents and is sifting through 117,000 more, including the emails of some non-enforcement staffers. "Despite this, Coinbase makes an additional, sweeping demand – that the SEC produce or log every document, including all SEC internal and external emails" related to the "application of the securities laws to digital assets," the filing states.
"...it is the Court's analysis of the facts and the law, not the SEC's internal discussions or
discussions with market participants that will decide this case, and Coinbase fails to cite a single case to the contrary," SEC said in its filing.
In a seeming response to Coinbase's earlier allegation that the SEC hasn't proven that reviewing more discovery documents for their potential relevance to the case, the regulatory agency said expanding its search to include other crypto custodians and search terms "would require the SEC to review through and potentially produce 3 million more documents that have little bearing on the facts of this case."
The agency also slammed the crypto company's request for Gensler's emails. "The burden here speaks for itself. Requiring the Chair to expend time on searches or submit a 'sampl[ing]' of personal emails is inherently time consuming and thus prejudicial to the SEC," it said.
Coinbase CLO claps back
Following the SEC's filing, Coinbase chief legal officer Paul Grewal reiterated that the regulator should at least be transparent as it continues to pursue an enforcement-first regulatory approach toward the digital assets space.
Update: Today @SECGov filed its response to our request to produce important documents showing the record of the SEC’s inconsistent views of digital assets and its own regulatory reach. If the SEC is going to engage in an unprecedented regulation by enforcement campaign, the… https://t.co/MxQ1omDGN3
— paulgrewal.eth (@iampaulgrewal) August 5, 2024
"If the SEC is going to engage in an unprecedented regulation by enforcement campaign, the least they owe to those they target – and the public – is transparency," he wrote on X.
Crypto users back Coinbase
Some crypto users took to the comments section of Grewal's post, agreeing that the SEC owes transparency to the companies it wants to regulate and the broader crypto community.
"Disclosures are never a burden when the accusing party is just and righteous," one user said, while another noted that the regulatory agency should also explain "why they are inconsistent."
Disclosures are never a burden when the accusing party is just and righteous. Nor would they be a problem if the @SECGov weren’t opaque and convoluted in their crypto:asset regulations to begin with. Godspeed Paul and @coinbase team.
— Paul Mak 🖖 (@Unbankt) August 5, 2024
Transparency and consistency. … or transparency on why they are inconsistent.
— CFred (@chruck2) August 5, 2024
Meanwhile, the SEC has been questioned multiple times by the crypto community and some lawmakers about its views on Ether and its status as a security or a commodity, but Gensler has repeatedly refused to provide a clear answer.
