SEC Slams Coinbase’s Document Request as Excessive, Citing 400 Hours of Work Already Spent
In the latest development in the legal conflict between the Securities and Exchange Commission (SEC) and cryptocurrency exchange Coinbase, the SEC has criticized Coinbase’s request for additional documents as excessive.
According to court documents filed on Monday, the SEC argues that Coinbase’s demand for emails from SEC Chairman Gary Gensler is “overreaching” and disproportionate to the needs of the case.
The SEC’s filing asserts that Coinbase’s request for further evidence is unwarranted, stating, “It is the Court’s analysis of the facts and the law, not the SEC’s internal discussions or discussions with market participants, that will decide this case, and Coinbase fails to cite a single case to the contrary.”
The regulator contends that there is no precedent supporting Coinbase’s argument that internal discussions involving Gensler and SEC staff would bolster its defense.
The SEC has already provided over 240,000 documents related to Coinbase, but claims that fulfilling Coinbase’s additional document request would require sifting through and logging another three million documents. This process would be labor-intensive, extending beyond the 400 hours the SEC has reportedly already spent on the case. The SEC argues that most of these documents would likely be privileged or irrelevant, making the request extremely burdensome.
It is worth noting that the dispute began in June 2023 when the SEC filed a lawsuit against Coinbase, alleging that the exchange operates as an unregistered securities exchange, broker, and clearing agency. Coinbase has countered that the SEC is exceeding its regulatory authority and failing to provide clear guidelines on what constitutes a security.
Despite a recent ruling in July where a U.S. judge found Coinbase’s arguments for the subpoena to be weak, the exchange maintains that obtaining these documents is crucial. Coinbase’s efforts to access the documents are part of a broader strategy to challenge the SEC’s regulatory stance.
In a separate update, Coinbase reported $1.4 billion in revenue for Q2, attributing the positive financial results to “improving regulatory clarity” within the crypto industry.
