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Highlights
- Judge calls Coinbase's subpoena of SEC Chair's communications 'fatuous' and potentially inappropriate.
- SEC argues Coinbase's demands for Gensler's prior communications irrelevant, setting troubling precedent.
- Coinbase urged by judge to modify subpoena effort, seek documents via formal SEC channels instead.
A hearing in the case of SEC v Coinbase occurred on Thursday, during which Judge Katherine Polk Failla had concerns about the Coinbase motion to seek the personal communication of Gary Gensler, the Chairman of the US Securities and Exchange Commission (SEC).
The judge noted that the request was unexpected and possibly improper in the given context.
Coinbase Subpoena Effort Surprises Judge
The hearing, which was held on short notice, centered on the SEC’s motion to quash a Coinbase subpoena served on Gensler. Judge Failla started by expressing her astonishment at the request for Gensler’s communications, both prior to and during his time as the SEC Chairman.
Judge opens up by saying she was "surprised" and "not in a good way" by Coinbase's effort and response to the SEC's effort to quash the subpoena against Gary Gensler
— @[email protected] (@nikhileshde) July 11, 2024
She said that Coinbase’s reasons for seeking the subpoena were ‘fatuous’ particularly on the aspect of Gensler’s past comments prior to his appointment.
Kevin Schwartz, an attorney from Coinbase, stated that Gensler’s background and past statements were significant for the case. However, the judge dismissed this as inconsequential, especially the demands for information before Gensler’s tenure as chairman.
SEC’s Response to Subpoena Request
Jorge Tenreiro, an SEC senior trial attorney, opposed Schwartz’s claims, saying that the subpoena was irrelevant and could pose a dangerous precedence. Tenreiro pointed out that the case concerns Coinbase’s actions, not Gensler’s statements as a private person or a scholar.
He emphasized that Gensler is neither a fact witness, nor an expert witness which further reduces the need for a subpoena.
As for the SEC’s position, the commission stated that to obtain any relevant information, a request should be made to the SEC, not its employees. They asserted that the subpoena was an unjustified invasion of Gensler’s personal and pre-SEC work life.
Judge’s Guidance and Future Proceedings
Judge Failla suggested that Coinbase should rethink or at least change its subpoena application significantly. She recommended that Coinbase should file a motion to compel, which would allow for proper briefing in relation to the matter.
The judge encouraged the parties to cooperate more effectively and try to address the discovery issues without undue judicial involvement.
Coinbase first sent document requests to the SEC in April and later focused on Gensler’s communication, including those made prior to his time at the SEC. The exchange pointed out that these communications are important to consider the overall regulatory environment and the personal opinion of Gensler, which may shape the outcome of the case.
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