Coinbase Pushes for Sanctions After SEC Loses Key Crypto Records
The credibility of the U.S. Securities and Exchange Commission is under fire after investigators revealed that almost a year’s worth of former Chair Gary Gensler’s text messages vanished.
The loss covers a period that included the implosion of FTX and several headline enforcement actions, fueling questions about how the regulator manages its own records.
How the Texts Disappeared
According to the SEC’s Office of Inspector General, the purge occurred when Gensler’s agency-issued phone was reset under a policy that wipes devices inactive for more than 45 days. The reset erased all text communications between October 2022 and September 2023. Efforts to retrieve the data failed, even though many of the missing messages were later determined to qualify as official federal records.
The problem doesn’t stop with Gensler. The watchdog found that more than 20 other senior officials may have lost records, while nearly 40 additional devices were never properly backed up. That discovery suggests the issue could be systemic, not isolated.
Coinbase Seizes the Moment
Coinbase quickly capitalized on the revelations, telling a federal court that the SEC’s handling of the matter violated the Freedom of Information Act and blocked a fair review of policy debates around Ethereum and digital assets. The exchange argues that the regulator not only dragged its feet in producing documents but also failed to disclose the deletion until much later.
In its filing, Coinbase is pushing for sanctions and expedited discovery to determine the full scale of the losses and the steps, if any, the SEC took to recover the records.
The exchange also accused the SEC of hypocrisy, pointing out that the regulator has fined Wall Street firms and crypto businesses billions for poor recordkeeping. If private companies are expected to meet strict compliance standards, Coinbase argues, the regulator should be held to the same bar.
A Question of Trust
The missing texts coincide with one of the most consequential years in crypto history. With the collapse of FTX, ongoing court battles, and regulatory crackdowns all falling within the deleted timeframe, critics say the gaps in the public record seriously undermine the SEC’s transparency.
For Coinbase, the controversy adds fuel to its broader fight with the regulator. For the SEC, it raises an uncomfortable question: how can an agency that enforces strict disclosure rules defend its own failure to preserve vital records?
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Alex is an experienced financial journalist and cryptocurrency enthusiast. With over 8 years of experience covering the crypto, blockchain, and fintech industries, he is well-versed in the complex and ever-evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His approach allows him to break down complex ideas into accessible and in-depth content. Follow his publications to stay up to date with the most important trends and topics.
