Fight Over Internal Documents Intensifies

In an escalation between Coinbase (NASDAQ: COIN) and the US Securities and Exchange Commission (SEC), the crypto exchange intensified its efforts on Monday, August 12, pushing for the SEC to release internal documents. This filing, a Reply Memorandum of Law by Coinbase, supports their motion to compel the SEC to fulfill discovery obligations.

Last week, the SEC argued against Coinbase’s demands, which include the release of personal crypto-related emails from SEC chairman Gary Gensler, by submitting a memorandum to the Southern District Court of New York. The SEC described these requests as “breathtakingly broad,” alleging that they are unnecessary and impose an undue burden on the regulator.

Coinbase Doesn’t Back Down

Coinbase’s response criticizes the SEC for not conducting a thorough search of non-Enforcement Division personnel documents, including those from SEC Commissioners and the Division of Trading and Markets, which have not been searched or produced. “After refusing for weeks to prepare a preliminary ‘hit report’ as the basis for constructive discussion, the SEC has now acceded to this threshold request—seeking to use those hit-report results to cut off, rather than facilitate, an informed discovery protocol,” Coinbase stated in the memorandum.

The filing further accuses the SEC of being selective in its document search and production processes, stating that the SEC overstated the burden of production by four times. Coinbase challenges the SEC’s reluctance to review documents from outside its Enforcement Division, emphasizing the relevance of various communications highlighted in other legal cases, such as the Ripple case.

One significant point of contention remains the SEC’s refusal to inquire whether Chair Gensler uses his personal email for communications relevant to the issues at the heart of the case. “Finally, with respect to Chair Gensler, the SEC refuses even to ask whether he receives or sends relevant communications on his personal email. The opposition offers no basis for this refusal,” the filing states. The crypto exchange insists that Gensler’s personal communications could contain critical information relevant to the case and argues that the SEC’s refusal to inquire about these communications is unjustifiable.

Coinbase also criticizes the SEC for dismissing the relevance of documents that could support the fair notice defense. “The SEC should be ordered to run searches relating to Coinbase’s fair notice defense… After proclaiming this defense ‘effectively dead’ and forswearing any such search ‘unless and until’ the Court confirmed it was ‘still in the case,’ the SEC now has that confirmation but persists in asserting the documents’ categorical irrelevance,” the exchange argues.

Additionally, Coinbase demands that the SEC log all documents reviewed and withheld, as stipulated by a court order implementing Rule 502(d). This request highlights the necessity for these actions to ensure a fair legal process, with the exchange ready to confer with the SEC to finalize the specifics of the search protocol.

At press time, COIN traded at $191.74.

Featured image from Egn-aquitaine, chart from TradingView.com