TLDR
- Coinbase has narrowed its subpoena request for SEC Chair Gary Gensler’s communications to focus only on his tenure as SEC Chair.
- The SEC sued Coinbase in June 2023, alleging violations of federal securities laws.
- Coinbase argues that the tokens on its exchange should not be considered securities.
- The exchange must submit its opening brief for the motion to compel by July 23, with the SEC’s response due by August 5.
- Bank of America and KBW have recently upgraded their ratings and price targets for Coinbase shares.
Coinbase, a major cryptocurrency exchange, has changed its approach in its ongoing legal battle with the U.S. Securities and Exchange Commission (SEC).
The company has narrowed its subpoena request for SEC Chair Gary Gensler’s communications, now focusing only on his time as head of the regulatory body.
The legal dispute began in June 2023 when the SEC sued Coinbase. The regulator accused the exchange of breaking federal securities laws by listing 13 tokens it considers securities.
The SEC also claimed that Coinbase had been operating as an unregistered securities broker since 2019, about two years before it went public.
Coinbase strongly disagrees with these allegations. The company argues that the tokens on its platform should not be classified as securities, stating they fall outside of SEC regulations. This disagreement forms the core of the ongoing legal battle.
Initially, Coinbase’s legal team wanted access to Gensler’s private communications from as far back as 2017. They argued this information was crucial to understand how Gensler’s views on crypto regulations had changed over time.
However, Judge Katherine Polk Failla expressed concerns about this broad request, particularly regarding communications before Gensler became SEC Chair.
In response to the judge’s reservations, Coinbase adjusted its strategy. In a July 15 filing, the company stated it would now only seek Gensler’s communications during his time as SEC Chair, which began in April 2021.
This change shows Coinbase’s willingness to adapt its legal approach as the case progresses.
The next steps in the legal process are approaching quickly. Coinbase must submit its opening brief for the motion to compel by July 23. The SEC will then have until August 5 to file its response. These deadlines will likely bring new developments in the case.
While the legal battle continues, Coinbase has also accused the SEC and the Federal Deposit Insurance Corporation (FDIC) of improperly blocking its document requests.
The exchange claims these regulators are preventing access to documents that should be available under the Freedom of Information Act (FOIA).
Despite the ongoing legal challenges, some financial institutions have recently shown increased confidence in Coinbase. Bank of America upgraded its rating on Coinbase shares from underperform to neutral and raised its price target from $110 to $217.
Similarly, investment banking firm KBW increased its Coinbase price target from $160 to $230, while maintaining its market performance rating.
These positive changes in financial outlooks suggest that some analysts believe Coinbase can weather its current legal storm. However, the outcome of the SEC lawsuit remains uncertain and could have significant implications for Coinbase and the broader cryptocurrency industry.
