Judge Criticizes Coinbase's Subpoena of SEC Chair

Judge Failla criticizes Coinbase’s attempt to subpoena SEC Chair Gensler’s communications, calling it surprising. The SEC argues that Gensler’s pre-chair communications are irrelevant and requests to quash the subpoena. Coinbase maintains Gensler’s communications are relevant for understanding the regulatory context.

In a recent hearing, Judge Katherine Polk Failla criticized Coinbase’s efforts to subpoena SEC Chairman Gary Gensler. She described these attempts as surprising and misguided. The judge emphasized the irrelevance of documents from Gensler's pre-chair period and suggested that Coinbase should revise or drop its request.

Judge Failla, presiding over the District Court for the Southern District of New York, expressed doubt about Coinbase’s reasons for the subpoena. “Both sides have smart, clever lawyers, but I was surprised—and not in a good way—by the arguments presented in the July 3 response,” she noted.

Coinbase initially sought documents from the SEC in April but later expanded this to include Gensler’s personal communications, covering his time as SEC Chair and the four years before. The SEC quickly opposed this, calling it an “improper intrusion” into Gensler’s personal life, arguing that relevant documents should be obtained from the agency itself, not individuals.

Jorge Tenreiro, a senior trial attorney for the SEC, argued that Gensler’s pre-chair communications were irrelevant. He stressed that Gensler is neither a fact witness nor an expert witness in this case. Tenreiro warned that approving such a subpoena could set a bad precedent for future cases. SEC lawyers, in their filing, stated, “Given the lack of relevance of the requested documents and the potential chilling effect on public service, the Court should quash the Subpoena and issue a protective order.”

Kevin Schwartz, Coinbase’s lawyer, argued that Gensler’s communications were important, especially those before his chairmanship. He claimed that Gensler’s role as a major commentator on digital assets and his public statements often reflected his personal views. Therefore, these communications were relevant to understanding the regulatory environment. “What Mr. Gensler said in private about the regulatory status of digital assets, and what market participants told him, helps understand what the public and market participants thought was allowed under securities laws,” Schwartz explained.

Judge Failla was unimpressed by Coinbase’s reasoning. She questioned the relevance of Gensler’s pre-chair comments, calling the arguments speculative and weak. However, she did acknowledge that the SEC had resisted Coinbase's requests and suggested that both parties work together on a briefing schedule. She advised Coinbase to file a motion to compel rather than continue with the current subpoena strategy.

The legal conflict between Coinbase and the SEC began in June 2023. The SEC sued Coinbase, alleging it operated as an unregistered exchange, broker, and clearing agency. It also claimed that Coinbase offered unregistered securities through its staking services.

The SEC has also targeted several tokens on Coinbase’s platform, including Solana (SOL), Cardano (ADA), and Polygon (MATIC), claiming they are unregistered securities. Coinbase has denied these accusations, asserting that none of the assets on its platform are securities.