SEC asks court to deny Coinbase’s discovery request in latest filing

The legal battle between the United States Securities and Exchange Commission and crypto exchange Coinbase rages on. The SEC is seeking to thwart the exchange’s request for the agency’s internal documents including private emails of SEC chair Gary Gensler.

In its latest filing on August 5, SEC lawyers have claimed that Coinbase’s discovery request to access the agency’s internal and external emails is overly broad and irrelevant to the case.

The SEC added that it has produced 240,000 documents and is looking to present an additional 117,000 documents.

SEC says it’s irrelevant

According to SEC lawyers, the “additional sweeping discovery” about the requested internal and external communications is not “relevant” because “the Howey analysis or fair notice defence” will decide Coinbase’s case. 

The filing states that the “burden of searching and producing” three million additional documents, which it deems “irrelevant”, is “entirely disproportional to the needs of the case.”

However, Coinbase chief legal officer Paul Grewal did not agree with the SEC’s claims in an August 6 post on X. Grewal reiterated that the documents were necessary to record the regulator’s “inconsistent views of digital assets and its own regulatory reach.”

He added:

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.

On the other hand, the SEC’s recent filing claims the agency has “satisfied its discovery obligations.” As such, the regulator has asked the court to deny Coinbase’s motion.

Hiccups along the way

Coinbase had initially asked the SEC to produce documents related to the SEC’s internal discussions on crypto regulation. The request also included documents related to private communications from Gensler during and four years before his time as chairman.

The crypto exchange stated the documents were crucial in its defence against the SEC to highlight the inconsistencies in the regulator’s approach while also proving a lack of clear guidance.

However, following a preliminary conference with the court, the exchange narrowed the scope of its requests to communications documents during Gensler’s tenure as the SEC chair, which started in 2021. The new request was reflected in a motion to compel filed on July 23.

The motion also requested documents related to Coinbase’s 2021 move to go public. The process involved a six-month SEC review period. However, Coinbase claimed that during that time, the SEC did not label the exchange or the tokens it was offering as unregistered securities.

At the time, Grewal also highlighted that the SEC had denied requests to search for requested documents, claiming undue burden.

The legal battle between the two parties ensued on June 6, 2023, when the SEC filed a lawsuit against the crypto exchange, claiming it was offering unregistered securities and had not registered as a broker or clearing agency. 

Further, the lawsuit named several tokens, such as Polygon, Cardano, Solana, and Axie Infinity, as securities.

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