SEC Under Fire for Erasing Communications Linked to Gensler and Crypto Policies
Coinbase’s chief legal officer, Paul Grewal, revealed on Sept. 11 that the company had escalated its legal challenge against the U.S. Securities and Exchange Commission (SEC), citing a watchdog report that confirmed widespread failures in record preservation. Grewal stated on social media platform X:
The Gensler SEC destroyed documents they were required to preserve and produce. We now have proof from the SEC’s own Inspector General. Today we ask the federal court to address this gross violation of public trust to ensure that it never happens again.
His comments came as History Associates, representing Coinbase, filed a status report in the U.S. District Court for the District of Columbia.
A Sept. 3 report from the SEC Office of Inspector General (OIG) revealed that nearly a year of former Chair Gary Gensler’s text messages—from October 2022 to September 2023—were permanently deleted under a new device-wiping policy. The missing texts align with the collapse of FTX and the SEC’s increased enforcement actions against crypto firms, including Coinbase. “The SEC OIG report last week revealed texts from October 2022-September 2023 were destroyed. The Gensler SEC did this even though we asked for information about ‘all communications’ within the SEC related to crypto regulatory and enforcement decision-making years ago,” Grewal detailed.
The filing argues the SEC failed to meet its FOIA obligations, delayed searches until April and June 2025, and admitted that many officials’ devices could not be backed up. The OIG found that at least 21 senior SEC officials’ text messages may already be lost and that around 40 additional devices remain at risk. Recovered texts from third parties showed substantive discussions about pending enforcement actions, settlements, and speeches on crypto—contradicting earlier claims that Gensler used texts only for administrative purposes.
Coinbase is pressing for remedies. Grewal declared:
We want expedited discovery, sanctions, and immediate production of all responsive texts. Considering the double-standards of the previous Chair it’s not surprising that the same agency that fined firms billions for record-keeping failures committed the exact same violations.
The company contends that the SEC’s approach has undermined transparency, highlighting the irony that the agency has penalized private firms over $1 billion for recordkeeping lapses while engaging in similar conduct itself. Pro-crypto advocates argue that holding regulators to the same accountability standards is essential for preserving public trust in financial oversight.
