SEC Claims Coinbase Subpoena of Millions of Documents is a Waste of Time

In the latest legal battle between the SEC and Coinbase, the regulator’s lawyers complained that the cryptocurrency exchange’s attempts to subpoena the emails of its chairman, Gary Gensler, were “overbearing.”

According to court documents filed Monday, the SEC is arguing that Coinbase’s requests for additional documents and evidence are “disproportionate” to the needs of the case.

“The decision in this case will depend on the court’s analysis of the facts and law, not on the SEC’s internal discussions or discussions with market participants, and Coinbase has not cited a single case to the contrary,” the document reads.

The regulator argues that internal discussions between Gensler and other SEC commissioners and outside organizations are unprecedented in supporting Coinbase’s defense.

The SEC also claims that it has already provided over 240,000 documents related to Coinbase. The company has failed to explain the relevance of the additional documents requested, and the SEC claims that in order to provide the additional documents, it must record and process 3 million documents, effectively recording and processing all materials related to crypto assets.

Given that the SEC is “likely to claim privilege” on most of the documents, this would require manually recording a process that would far exceed the 400 hours the SEC claims it has already invested.

According to the document, “The burden of having to search for, produce, or record, one by one, an additional 3 million unrelated external documents or clearly privileged internal SEC documents due to Coinbase’s unrestricted requests is wholly disproportionate to the needs of the case.”

The legal battle between the two companies began in June 2023 when the SEC filed a lawsuit against Coinbase, claiming that the company operated an unregistered securities exchange, broker-dealer, and clearinghouse.

Coinbase argues that the SEC is overstepping its regulatory authority and, among other things, failing to provide clear guidance on what constitutes a security.

The company argues that its SEC filings demonstrate this lack of clarity.

at Early JulyThe US judge said Coinbase’s subpoena justification was unimpressive and that the “reservoir of trust” the company had built up had been depleted. Despite the ruling, access to these documents was a “critical” part of the motion Coinbase filed in late July. Reported by Decrypt.

Elsewhere, Coinbase reported $1.4 billion in second-quarter revenue late last week, citing “improved regulatory clarity” as a boost to innovation in the cryptocurrency industry.

The SEC and Coinbase have not yet responded to requests for comment.

editor Sebastian Sinclair