The U.S.-based cryptocurrency exchange Coinbase has accused the U.S. Securities and Exchange Commission (SEC) of destroying nearly a year’s worth of text messages from former Chair Gary Gensler. The exchange has also urged a federal court in Washington to impose sanctions on the regulator.
The exchange filed the request on September 11, after the SEC’s Office of Inspector General (OIG) released a report on September 3 which confirmed that almost one year of text messages from Gensler and other senior officials were permanently erased.
Messages Lost in “Avoidable” Mistakes
The OIG report described the deletion as the result of an “avoidable” mistake, which has raised questions about how vital records could vanish so easily.
According to the Inspector General, Gensler’s texts from October 2022 through September 2023 were permanently lost after the SEC’s IT staff reset his smartphone before backing up its data. The watchdog noted that the records might have been preserved with proper procedures, but the mistakes led to permanent loss.
Coinbase Says It a Violation of Trust
Coinbase’s filing stressed that the SEC had failed to conduct a full search of its records when answering Freedom of Information Act (FOIA) requests in both 2023 and 2024. The exchange argued that these missing texts qualify as agency records and should have been preserved.
In its motion, Coinbase asked the court to compel the SEC to produce all requested documents, including communications about Ethereum’s shift to proof-of-stake. The company added that court involvement is needed to ensure compliance with earlier orders and to secure every available piece of evidence.
Chief Legal Officer Paul Grewal said Coinbase was calling on the court to stop the issue from repeating. He described the deletion as a “gross violation of public trust” and insisted that accountability was critical for confidence in regulatory oversight.
SEC Promises More Transparency
The filing also suggested that once the missing documents are recovered and reviewed, an additional hearing could determine whether attorney fees or sanctions should follow. Coinbase further noted that the court could consider measures strong enough to “trigger a Special Counsel investigation.”
In response to this, a spokesperson from the SEC said in a statement that the agency has always been transparent.
“When Chairman Atkins was briefed on this matter, he immediately directed staff to examine and fully understand what occurred and to take steps that will prevent it from happening again,” the spokesperson said.
Meanwhile, the lost records overlap with a turbulent period in the crypto industry, especially the collapse of FTX and enforcement actions against Binance, Kraken, and Coinbase. Coinbase said it had even offered to cover processing fees to secure these documents, but the SEC still failed to provide them.
The lawsuit also connects to other disputes, such as questions around “Ethereum 2.0” and Operation Chokepoint 2.0, which critics say targeted banks working with crypto firms.
Also Read: SEC’s Crypto Task Force Meets with SIFMA to Discuss Regulations
