There is a New Development in Coinbase-SEC Case! Here are the Details

A New York judge has partially granted cryptocurrency exchange Coinbase’s request to compel the U.S. Securities and Exchange Commission (SEC) to produce certain documents in an ongoing legal dispute.

However, the judge rejected Coinbase's effort to subpoena SEC Chairman Gary Gensler to testify.

The ruling by U.S. District Judge Katherine Polk Failla was made in response to a petition Coinbase filed in July requesting documents from the SEC that it claimed were critical to its defense in the case. The SEC filed a lawsuit against Coinbase in 2023, alleging that the company operated its platform without proper registration. Coinbase disputed those allegations and moved the case to the discovery phase.

Judge Failla’s decision, released Friday, allows Coinbase to access some of the requested documents, but excludes Gensler’s testimony and other materials. “For the reasons recorded in the telephone conference held on September 5, 2024, the Court GRANTS IN PART AND DENIES IN PART Defendants’ motion to compel,” the decision said.

Coinbase’s legal team initially requested documents related to several areas, including the SEC’s assessment of the tokens named in the agency’s complaint and the SEC’s deliberations regarding Coinbase’s April 2021 IPO. The company also sought statements made by Gensler during his tenure at the SEC.

While the judge ordered the SEC to provide documentation related to token classification under the Howey Test (used to determine whether certain assets qualify as securities), the request was narrowed. The SEC will not be required to provide internal agency documents unless they contain external attachments.

Coinbase’s request to compel Gensler to provide documents, including personal emails related to crypto discussions between 2017 and 2021, was denied. A source familiar with the case confirmed that the SEC will not be required to comply with that subpoena.

Coinbase had also argued that the SEC should seek additional documents from its senior management and past commissioners. While the SEC offered to provide documents from five staff members, Judge Failla directed the agency to expand its search to include more staff, though not as broad as Coinbase had hoped. Under the court’s ruling, former and current SEC commissioners will not be included in the expanded search.

Judge Failla also granted the SEC's request to permanently seal certain redacted information.

Coinbase Chief Legal Officer Paul Grewal expressed his positive views on the judge’s decision, stating that this decision will lead to the release of important documents that could aid their defense.

*This is not investment advice.