The U.S. Securities and Exchange Commission (SEC) has agreed to pay Coinbase $150,000 after losing nearly a year’s worth of former SEC Chair Gary Gensler’s text messages related to cryptocurrency regulation. The settlement ends a Freedom of Information Act (FOIA) lawsuit filed by Coinbase, while also requiring the SEC to strengthen how it preserves official communications in the future.
The case has drawn attention because the missing messages covered a critical period in the SEC’s crypto enforcement campaign, raising fresh questions about transparency and government recordkeeping.
Coinbase wins settlement over missing SEC records
Coinbase Chief Legal Officer Paul Grewal revealed the settlement in a Wall Street Journal opinion piece published on July 22.
As part of the agreement, the SEC will pay Coinbase $150,000 and update its internal policies for storing official communications. The lawsuit centered on Coinbase’s request for internal SEC records that could provide insight into how senior officials handled cryptocurrency regulation and enforcement during Gary Gensler’s leadership.
The crypto exchange had also pursued similar transparency efforts against the Federal Deposit Insurance Corporation (FDIC), seeking documents related to what it believed were coordinated attempts to restrict banking services for crypto businesses.
Nearly 11 months of Gary Gensler’s texts were permanently lost
A review by the SEC Office of Inspector General found that preventable technology failures led to the loss of Gensler’s text messages covering the period from October 18, 2022, to September 6, 2023.
According to the report, SEC technology staff performed a factory reset on Gensler’s government-issued iPhone after he experienced problems accessing SEC applications. Unfortunately, the reset took place before a complete backup was created, permanently deleting months of communications.
Although technicians backed up the device later that same day, the deleted messages could no longer be recovered.
The Inspector General concluded that a timely backup and stronger recordkeeping procedures would have prevented the loss.
Delayed policy changes contributed to the problem
The report also revealed that the SEC had already planned to disable text messaging on agency-issued devices in October 2022.
However, implementation was delayed while officials worked on exemption procedures and prepared for the possibility of a government shutdown. As a result, Gensler’s phone remained active without additional backups before the factory reset occurred.
The SEC eventually removed the texting application from official devices in March 2024.
Investigators later discovered similar issues affecting the mobile devices of five other senior SEC officials, raising broader concerns about the agency’s ability to preserve official records.
Coinbase says missing records undermined transparency
Paul Grewal criticized the SEC for failing to preserve communications that Coinbase had specifically requested years earlier.
He argued that the agency destroyed records it was legally required to maintain, particularly communications involving cryptocurrency regulatory decisions.
According to Grewal, Coinbase had requested all internal SEC communications related to crypto policy and enforcement. However, the regulator claimed the missing messages resulted from an automated data wipe during routine device maintenance.
The Inspector General’s findings contradicted that explanation, stating the loss could have been avoided through proper backup procedures.
FOIA battle began during SEC enforcement case
Coinbase’s effort to obtain SEC records predates the current settlement.
During the SEC’s enforcement lawsuit against the exchange in 2024, Coinbase sought documents connected to Gary Gensler’s speeches, internal discussions, and communications regarding digital asset regulation.
Initially, the SEC resisted those requests, arguing that searching broader agency records would create an excessive burden. Coinbase later narrowed its request to focus only on communications made during Gensler’s tenure as SEC Chair.
The exchange argued that these records were directly relevant to the agency’s allegations that Coinbase operated as an unregistered securities exchange, broker, and clearing agency.
That enforcement case was ultimately dismissed in February 2025 under the Trump administration without Coinbase paying penalties or making changes to its business operations.
Settlement marks a victory for transparency
The agreement not only ends Coinbase’s FOIA lawsuit but also forces the SEC to improve how it stores and preserves official communications.
The Inspector General’s investigation concluded that the loss of Gary Gensler’s text messages resulted from avoidable technology failures rather than unavoidable technical issues.
For Coinbase, the settlement represents both financial compensation and a commitment by the SEC to strengthen its recordkeeping practices moving forward.
As the agency develops new policies for tokenized securities and broader cryptocurrency regulation under its current leadership, the case serves as a reminder that transparency and proper document preservation remain essential for maintaining public trust.
