The SEC argues that the request for internal and external emails related to digital asset regulation is “overly broad”.
In the latest development around the ongoing legal battle between the US Securities and Exchange Commission (SEC) and American exchange Coinbase, the regulator has once again pushed against what it calls an irrelevant discovery request by the exchange. The move follows Coinbase’s insistence on getting internal communications from SEC Chair Gary Gensler.
According to the SEC’s latest motion, which was filed on August 5, the regulator believes that Coinbase is now overreaching. Hence, it seeks to block Coinbase’s efforts to access this broad array of documents that the agency deems irrelevant and excessive at best.
SEC Disputes Scope of Discovery, Calls Coinbase’s Requests Disproportionate
The SEC has criticized Coinbase for seeking an overwhelming amount of materials. It argues that the request for internal and external emails related to digital asset regulation is “overly broad.” The agency also says that Coinbase’s demands for nearly three million additional documents are largely disproportionate and would count for nothing towards resolving the central issues of the case.
By the SEC’s accounts, it has and is still dancing to the tune of Coinbase’s rhythm of demands. That is, at least, to the best of its knowledge. The commission noted that it has already produced over 240,000 documents and is currently reviewing another 117,000 for relevant material.
Furthermore, the SEC explained the irrelevance of the additional documents requested by Coinbase. The commission notes that while the said documents may apply to other areas, they do not directly serve to the Howey test or fair notice defense, which are likely the major determinants of the outcome of the case.
Additionally, the commission is wary of the undue burden that producing such a large volume of material would impose on its resources. An excerpt from the recent filing reads:
“The burden of searching, producing, or logging an additional three million documents is vastly disproportionate to the needs of the case.”
Coinbase Responds, Says Nothing Wrong with Showing Transparency
In response to the latest motion by the SEC, Coinbase’s Chief Legal Officer Paul Grewal has taken to social media to defend the request. Grewal maintains that obtaining these documents is the only way to prove the inconsistencies of the SEC on digital assets and its regulatory approach. He says that the action would go a long way in ensuring greater transparency. More so, in light of the SEC’s “regulation by enforcement” strategy. The X post reads:
“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.”
The SEC sued Coinbase in June 2023, accusing the company of operating as an unregistered securities broker for more than four years. It also identified 13 crypto assets as securities, further intensifying the legal fight between the two parties.
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