Coinbase has petitioned a federal court to force the Commodity Futures Trading Commission to hand over any communication it had with several crypto token issuers to help it defend against a Securities and Exchange Commission suit.
According to an Oct. 1 motion to compel, the crypto exchange wants the CFTC’s communications with the issuers of 12 cryptocurrencies that the SEC has alleged are unregistered securities that Coinbase sold.
It also asked for documents on the scope of the two regulators' “respective regulatory authorities over digital assets, including market uncertainty on this subject.”
The exchange claimed the information “is critical to Coinbase’s ability to defend itself against the allegations in the SEC Action” as it could review if the 12 cryptocurrencies alleged to be securities meet the definition.
Coinbase disclosed that it subpoenaed the CFTC for the information in July—its second attempt after a wider-ranging subpoena a month earlier.
Highlighted excerpt of Coinbase’s compel motion arguing why it needs information from the CFTC. Source: CourtListener
But it claimed the CFTC “has stonewalled” the requests and “hasn’t even conducted a single search” despite the SEC being ordered by New York federal judge Katherine Folk Failla to “produce the same category of relevant information.”
“In the years preceding the SEC Action, both the SEC and CFTC actively solicited engagement with issuers of digital assets and other market participants to inform their understanding of the industry and its regulatory status,” Coinbase wrote.
“Coinbase is entitled to such highly relevant information in the CFTC’s possession,” it added.
The exchange claimed the CFTC knocked back its first subpoena “on the grounds of overbreadth, burden, and privilege.”
The regulator, however, “stated its willingness to reevaluate the subpoena if it were narrowed,” according to Coinbase.
But it allegedly kicked the second subpoena, too, with Coinbase quoting the CFTC as saying the request was “overly broad, vague, and would place an undue burden on the Commission.”
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In its motion, Coinbase argued that the CFTC hadn’t substantiated that it’d be burdened by finding the information and said, “No conceivable privilege could apply to them,” as the communications were with outside parties.
The CFTC did not immediately respond to a request for comment.
In June 2023, the SEC sued Coinbase, accusing the crypto exchange of operating as an illegal broker, securities exchange, and clearing agency.
In its filing, the regulator claimed 13 tokens are unregistered securities: Solana (SOL), Cardano (ADA), Polygon (MATIC), Filecoin (FIL), The Sandbox (SAND), Axie Infinity (AXS), Chiliz (CHZ), Flow (FLOW), Internet Computer (ICP), Near (NEAR), Voyager Token (VGX), Dash (DASH), and Nexo (NEXO).
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