Coinbase argues Gary Gensler’s email is ‘appropriate source of discovery’ in SEC lawsuit

Crypto exchange Coinbase has fought back on the Securities and Exchange Commission’s motion to block “reasonable discovery” from Gary Gensler, the agency’s chair, in the company’s ongoing legal battle with the SEC.

“We have responded to SEC’s effort to block reasonable discovery from Mr. Gensler in a case that it — not Coinbase — chose to file. Democracy, as well as due process, dies in darkness. We appreciate the Court’s careful consideration of this matter,” Paul Grewal, chief legal officer of Coinbase, wrote in a post on X today.

In a letter filed on Wednesday to U.S. District Judge Katherine Failla, Coinbase’s lawyer said that the discovery sought from Gensler is relevant. “Mr. Gensler’s communications regarding the regulatory status of digital assets and exchanges during his tenure as Chair go to the heart of Coinbase’s fair notice defense,” Coinbase said.

In April, Coinbase submitted requests for the production of documents on the SEC, and in June requested Gensler to produce documents concerning the communications that Coinbase claimed were relevant to the case. That would include documents about crypto from 2017 to the present, covering the four years before Gensler was sworn in on April 17, 2021.

The SEC said in a June 28 letter to the judge that Coinbase sought a search of the Gensler’s personal emails to determine if he used them to communicate his views about the federal securities laws and crypto assets. “The SEC rejected this position and proposal,” the letter said.

“The Subpoena should be directed at the SEC,” the agency said in the filing. “To the extent it is not, it is an improper intrusion into a public official’s private life, based on his decision to serve. Given also the utter lack of relevance of the requested documents, and the potential chilling effect on public service, the Court should quash the Subpoena and issue a protective order.”

Pressing for subpoena

On Wednesday, Coinbase responded in the filing to the judge that Gensler’s personal email is “an appropriate source of discovery.”

“What Mr. Gensler was saying in his private communications about the regulatory status of digital assets, and what market participants were saying to him about these matters, is probative of the objective understanding of the public and market participants regarding what conduct the securities laws prohibit,” Coinbase argued in the letter.

The crypto exchange also cited Ripple’s case in the filing. “As the Ripple court confirmed, a document or communication need not be public to provide insight into the public’s objective understanding as to what regulators require of them: agency personnel’s communications with market participants and interagency correspondence are all ‘relevant to the fair notice defense,’” Coinbase added.

Last week, Coinbase filed two lawsuits against the SEC and the Federal Deposit Insurance Corporation for not complying with Freedom of Information Act requests and has asked a court to force those agencies to comply.