TLDR
- Coinbase seeks court sanctions after SEC deleted ex-Chair Gensler’s texts from Oct 2022 to Sept 2023.
- Lost messages cover FTX collapse and SEC enforcement actions against Coinbase and other crypto firms.
- Inspector General confirms the SEC failed to preserve federal records from over 20 senior officials’ devices.
- Coinbase claims SEC violated FOIA and delayed disclosure of missing records critical to crypto oversight.
The legal dispute between Coinbase and the U.S. Securities and Exchange Commission (SEC) has escalated. Coinbase is now asking a federal court to sanction the SEC after learning that key text messages from former SEC Chair Gary Gensler were deleted. These messages reportedly covered a critical period in digital asset regulation, including the collapse of FTX and enforcement actions against Coinbase.
Deleted Messages From SEC Chair Spark Legal Tensions
Coinbase informed the court that nearly one year of messages from Gensler’s phone, between October 2022 and September 2023, were erased. The texts were deleted during a remote reset of his SEC-issued phone after it was inactive on the agency’s network for over 45 days. According to an internal report from the SEC’s Office of Inspector General, efforts to retrieve the data were not successful.
The deleted messages fall within a period that included the collapse of crypto exchange FTX and several key enforcement actions. Coinbase argued that this lost data included communication that could influence the public’s understanding of the SEC’s digital asset policies. The company claims the SEC failed to notify the court about the missing records until much later and used limited search terms when required to produce full communication records.
Coinbase Claims FOIA and Recordkeeping Violations
In its latest filing, Coinbase stated that the SEC’s deletion of Gensler’s texts violated the Freedom of Information Act (FOIA). The company said the agency did not preserve official records, which should have been maintained under federal law. Coinbase, working with research firm History Associates, presented these findings to the court to support its request for sanctions.
The Office of Inspector General’s report confirmed that Gensler’s texts were not only lost but also were considered official records. This raises concerns about broader recordkeeping practices at the agency. The report also found that messages from over 20 other top officials may already be missing. Devices belonging to nearly 40 more senior SEC staff members were also not properly backed up.
Coinbase stressed that the same standards the SEC applies to private companies must apply to the agency itself. In the past, the SEC has fined firms over recordkeeping failures, and Coinbase says it should be held to the same expectations. The company is asking for expedited discovery to understand what happened to the deleted records and what steps, if any, were taken to recover them.
SEC Faces Pressure as Crypto Oversight Scrutiny Grows
Coinbase’s legal team said that the loss of these records happened during a key time for the cryptocurrency industry. This includes the SEC’s evolving stance on Ethereum and other digital assets. The company claims the missing communications blocked an accurate review of regulatory actions during that period.
The dispute adds to broader concerns about the SEC’s internal systems and its approach to transparency. As enforcement actions against digital asset firms increase, questions around the agency’s handling of internal records have drawn attention. Coinbase argues that the deletion of messages undermines public trust in the agency’s work.
The court will now review Coinbase’s request to impose sanctions and allow further investigation into the SEC’s data retention practices. Coinbase’s filing also signals continuing resistance from other global players to its tokenized stock plans, showing that regulatory challenges remain on several fronts.
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