In the ongoing legal battle between the crypto exchange Coinbase and the US Securities and Exchange Commission (SEC), Coinbase’s Chief Legal Officer, Paul Grewal, has taken to social media X to express his concern about the SEC’s attempt to block access to communications from the SEC. Chairman Gary Gensler. The legal dispute centers on a report provided to Gensler, seeking documents from the SEC’s communications chairman, both inside and outside of his role at the SEC.
Coinbase Puts Gensler Under the Microscope
Grwal said, “We responded to the SEC’s attempt to block reasonable discovery from Mr. Gensler in a situation he—not Coinbase—chose to enter. Democracy, and due process, die in the dark. We appreciate the Court’s careful consideration of this matter.”
Coinbase’s legal challenge focuses on finding connections from Gensler’s time as a prominent regulator and academic analyst, arguing that his two roles have had a significant impact on the understanding and regulation of the digital assets framework. Their official response to the SEC’s proposal to revoke the subpoena reveals that, “Over the past 15 years, Mr. Gensler has been not only a prominent regulator but also an outspoken academic analyst, regarding the regulatory environment of digital assets and exchanges.”
The documents requested in the subpoena are described as important to understanding whether Coinbase had a reasonable opportunity to know how securities laws apply to its operations. The letter disputes the validity of this connection, saying, “Mr. Gensler’s communication about the regulatory environment of digital assets and exchanges during his tenure as Chairman goes to the core of Coinbase’s fair notice defense.”
It emphasizes the need for these documents to determine whether Coinbase, “a person of common sense,” has a “reasonable opportunity to know” whether securities laws and those charged with enforcement prohibit them in connection with the secondary sale of digital assets.
Coinbase also pointed out the SEC’s inconsistency, noting that the agency had previously argued in similar circumstances that private communications by regulatory officials were appropriate. The book cites the precedent, “As the Ripple court confirmed, a document or communication does not need to be public to provide an understanding of the public’s intent about what regulators need from them: communications between agency staff and market participants and interagency correspondence are all ‘important.’ in protecting fair notice.’”
This comparison is intended to strengthen the argument that Gensler’s private emails and communications can shed light on his personal interpretation and advice he may have informally given about digital assets.
Coinbase’s submission emphasizes that these communications will likely contain important insights into the SEC’s approach and Gensler’s personal views, which may differ from public and official views. The letter asserts that the SEC’s refusal to even confirm the existence of such documents increases the need for their disclosure, arguing that without them, Coinbase cannot fully explain its defense based on proper notice.
At press time, COIN traded at $224.94.
Featured image from Medium, chart from TradingView.com
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