SEC Challenges Coinbase’s Broad Subpoena Request

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The U.S. Securities and Exchange Commission (SEC) is currently urging a federal court to reject a broadly sweeping subpoena request made by Coinbase. This request seeks to access the personal communications of the SEC’s Chair, which Coinbase claims are relevant to its defense in an ongoing legal dispute with the SEC over alleged violations of securities laws.

According to the SEC, Coinbase is overreaching in its approach to gather evidence, with the subpoena requests being characterised as “breathtakingly broad.” Essentially, Coinbase aims to procure almost every document relating to cryptocurrency, which complicates the situation further.

This legal tussle has been intensifying since Coinbase was accused of operating unlawfully as an unregistered securities exchange, broker, and clearing agency, while also conducting unregistered sales of securities in relation to its staking products. The situation escalated earlier this year when Coinbase initiated a document production request from the SEC in April.

However, by June, the demands had expanded significantly, with Coinbase seeking communications pertaining to cryptocurrency that date back to four years prior to SEC Chair Gensler’s appointment. Adding another layer to the complexity, Coinbase also issued a similar subpoena to the Massachusetts Institute of Technology (MIT), where Gensler had previously lectured on blockchain technology. Nonetheless, Coinbase later opted to retract its pursuit of records from MIT.

In response to these developments, the SEC condemned Coinbase’s request for Gensler’s personal communications, labelling it a “blatant impropriety.” A letter dated June 28 urged District Judge Failla to dismiss the demands put forth by Coinbase. During a pre-trial conference on July 11, Judge Failla expressed her surprise and concern about the broad nature of Coinbase’s requests, particularly questioning how relevant Gensler’s personal communications from before his appointment could be.

The judge has instructed Coinbase to revise its approach and file a motion to compel in order to address the ongoing discovery dispute. Consequently, on July 23, Coinbase followed this directive and submitted its motion, slightly narrowing the scope of the subpoena while still retaining its central requests.