Judge criticizes Coinbase’s attempt to subpoena SEC Chairman Gary Gensler

In a July 11 hearing, Judge Katherine Polk Failla expressed skepticism about Coinbase’s efforts to subpoena SEC Chairman Gary Gensler in the SEC’s ongoing case against the cryptocurrency exchange .

As Inner City Press detailed, the hearing showed Coinbase’s persistent efforts to acquire Gensler’s communications, including statements made before he became SEC chairman in 2021.

The skeptical judge of the Coinbase subpoena

Judge Failla stated, “My understanding from the SEC’s initial filing is that this request includes a period before his presidency. You’re going to have a tough row to crack on that. I find your arguments speculative.”

Judge Failla: My understanding from the SEC’s initial brief is that this request includes a period prior to his presidency. You’ll have a hard time crushing it. I find your arguments speculative.
Coinbase’s lawyer: Even the period he was president, they say no

— Inner City Press (@innercitypress) July 11, 2024

Coinbase’s legal team argued that they could not obtain the necessary information from the SEC, prompting them to include Gensler’s pre-presidential communications to bolster their fair notice defense. “Even the period in which he was president, they say no. We tried to contact Mr. Gensler and the SEC, however, have declined to say he did not use his personal device to communicate about crypto.

However, Judge Failla dismissed that argument, stating, “I don’t find that argument persuasive. You just have to keep it in mind.” He urged Coinbase’s legal team to reconsider its approach, noting, “I think you should cut your losses and go to the second point.”

Coinbase maintained that Gensler’s unique role in shaping the public understanding of cryptocurrency justified the inclusion of his communications. In response, Judge Failla acknowledged the potential difficulty facing Coinbase.

Judge Failla: I’m concerned if you’ve been locked up. I am sorry to hear that there is another motion from you. I will be here for those motions.

— Inner City Press (@innercitypress) July 11, 2024

SEC legal representative Jorge Tenreiro argued against the subpoena, saying, “What they’re asking, of a public official, is incredibly intrusive. Officials have important duties. The cases examine the actions of the SEC, not a person’s actions. Before they ask us to take their personal phone, show us.”

Tenreiro has stressed that Gensler is neither a fact witness nor an expert in law, arguing that the subpoena should be quashed.

Coinbase countered by citing a case in which the Ripple court ordered discovery of communications from 19 custodians, including then-chairman Jay Clayton. However, Tenreiro noted that the issue of personal devices had already been addressed in the Ripple case.

Judge Failla was sympathetic to the SEC’s position, commenting, “I take a strong view about the disproportionate burden of investigating Mr. Gensler’s statements before he became president.”

The judge orders Coinbase to file a motion to compel

In closing, Judge Failla ordered Coinbase to proceed with a motion to compel, setting a deadline for further scheduling talks with the SEC, to which the exchange’s attorney confirmed, “Certainly.”

Judge Failla: It looks like he’s not withdrawing the subpoena. I would prefer that you start with a motion to compel.
Coinbase Attorney: We’d be happy to do so.
Judge: Make a calendar with the SEC, offline. Letter for Monday?
Coinbase Lawyer: Absolutely.

— Inner City Press (@innercitypress) July 11, 2024

The origins of this dispute date back to June, when Coinbase requested documents and communications regarding Gensler’s public comments on digital assets, platforms and participation services from May 2021 to September 2023. The request from Coinbase also included 33 other requests for documents and communications related to the SEC. shares

On June 28, the agency asked the court to quash the subpoena against Gensler, a motion to which Coinbase responded on July 3 by asserting the relevance of his personal communications to its fair notice defense .

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