A
federal
judge
encouraged
Coinbase
to
drop
–
or
at
least
substantially
modify
–
its
efforts
to
subpoena
U.S.
Securities
and
Exchange
Commission
(SEC)
Chairman
Gary
Gensler’s
personal
communications
during
a
hearing
Thursday.
Judge
Katherine
Polk
Failla,
of
the
District
Court
for
the
Southern
District
of
New
York,
scheduled
a
hearing
on
short
notice
Thursday
after
SEC
attorneys
asked
her
to
block
a
Coinbase
subpoena
last
month
directed
at
Gensler.
The
judge
said
she
was
“actually
quite
surprised
by
the
request”
made
to
Gensler
in
his
personal
capacity
at
the
start
of
the
hearing.
Near
the
end,
after
both
parties
had
explained
their
arguments,
she
indicated
she
still
believed
Coinbase’s
request
was
inappropriate
but
asked
the
exchange
to
file
a
motion
to
compel
for
a
formal
proceeding
where
both
parties
can
brief
their
arguments
more
in
depth.
“I
imagined
that
there
was
something
I
was
missing,”
she
said
at
the
outset.
“Let
me
note
that
counsel
on
both
sides
is
very
smart,
very
clever,
they’re
all
very
clever
people…but
I
was
kind
of
surprised
and
not
in
a
good
way.
I
found
the
arguments
at
least
as
articulated
in
the
July
3rd
response
to
border
on
the
fatuous.”
“I
was
not
moved
by
basically
any
of
the
arguments,”
she
said.
The
judge
took
specific
issue
with
Coinbase
requesting
documents
from
Gensler
predating
his
term
as
chair
of
the
regulatory
agency.
Kevin
Schwartz,
an
attorney
with
Wachtell,
Lipton,
Rosen
&
Katz
representing
Coinbase,
said
the
agency
has
refused
to
even
discuss
the
totality
of
the
documents
Coinbase
might
have,
but
that
Gensler’s
communications
were
relevant
to
the
case.
Jorge
Tenreiro,
an
SEC
senior
trial
attorney,
said
Gensler’s
communications
before
he
became
chair
of
the
agency
were
not
relevant
to
the
case,
adding
that
the
SEC
chair
is
neither
a
fact
nor
expert
witness
in
the
case
and
could
set
a
concerning
precedent
in
future
cases.
Near
the
end
of
the
hearing,
the
judge
told
Schwartz
that
she
had
“strong
views”
on
the
value
of
Gensler’s
statements
from
before
he
took
the
reins
at
the
federal
agency
and
that
she
was
still
leaning
toward
the
SEC’s
view
that
the
requests
were
inappropriate.
Still,
the
judge
asked
the
two
parties
to
get
together
and
work
on
a
briefing
schedule,
suggesting
that
rather
than
working
off
of
the
SEC’s
motion
to
quash,
she’d
like
Coinbase
to
file
a
motion
to
compel
and
work
through
the
process
that
way.
Coinbase
subpoena
The
crypto
exchange
initially
served
the
SEC
with
requests
for
the
production
of
documents
in
April.
In
June,
Coinbase
told
the
SEC
that
it
also
planned
to
subpoena
SEC
Chair
Gary
Gensler’s
personal
communications
related
to
crypto
over
the
course
of
his
tenure,
plus
four
years
before
he
was
appointed
Chairman.
In
a
letter
to
the
court
on
June
28,
the
SEC
pushed
back,
calling
the
subpoena
request
an
“improper
intrusion”
into
Gensler’s
private
life
and
arguing
that
any
subpoena
should
be
directed
at
the
SEC,
not
at
individual
employees
of
the
agency.
“Given
also
the
utter
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,”
lawyers
for
the
SEC
argued.
Coinbase’s
Schwartz,
during
Thursday’s
hearing,
said
the
SEC’s
charges
included
conduct
from
before
Gensler
was
chair,
though
Tenreiro
responded
that
the
charges
are
specific
to
Coinbase’s
conduct
and
not
Gensler’s
communications
as
a
private
citizen.
Fair
game?
In
their
July
3
response
to
the
SEC’s
letter
to
the
court,
lawyers
for
Coinbase
argued
that
it
is
fair
game
to
subpoena
Gensler’s
personal
communications
because
he
is
“not
only
the
most
prominent
regulator,
but
also
the
most
vocal
academic
commentator,
concerning
the
regulatory
status
of
digital
assets
and
exchanges,”
and
often
speaks
publicly
while
expressing
that
his
views
are
his
personal
views,
not
that
of
the
SEC.
“What
Mr.
Gensler
was
saying
in
his
private
communications
about
the
regulatory
status
of
digital
assets,
and
what
market
participants
were
saying
to
him
about
these
matters,
is
probative
of
the
objective
understanding
of
the
public
and
market
participants
regarding
what
conduct
the
securities
laws
prohibit,”
Coinbase’s
lawyers
wrote.
“[A]
document
or
communication
need
not
be
public
to
provide
insight
into
the
public’s
objective
understanding
as
to
what
regulators
require
of
them:
agency
personnel’s
communications
with
market
participants
and
interagency
correspondence
are
all
‘relevant
to
the
fair
notice
defense.'”