Coinbase has initiated a legal motion seeking court sanctions against the U.S. Securities and Exchange Commission (SEC) after revealing that nearly a year’s worth of messages from former SEC Chair Gary Gensler had been permanently deleted. These messages, covering the timeframe from October 2022 to September 2023, included significant discussions on critical crypto events such as the collapse of FTX and subsequent enforcement actions concerning various cryptocurrency exchanges.
The motion, filed in federal court with the support of History Associates, asserts that the SEC violated the Freedom of Information Act (FOIA). This development follows a report from the SEC’s Office of Inspector General (OIG), which identified significant failings in the agency’s information management practices. The report disclosed that Gensler’s communications, which addressed enforcement measures and settlements related to cryptocurrencies, were wiped clean as part of a stringent device management policy.
Coinbase’s Chief Legal Officer, Paul Grewal, condemned the deletion of these records as a “gross violation of public trust.” Grewal has urged the federal court to implement measures to prevent such occurrences in the future, emphasizing the need for transparency and accountability.
In its legal argument, Coinbase highlights a perceived double standard in how the SEC manages record-keeping. The exchange contends that while private companies face scrutiny and consequences for similar failures, the SEC appears to evade responsibility for its own shortcomings. The lawsuit calls on the court for expedited searches of remaining records and an investigation into the circumstances surrounding the destruction of official communications. Coinbase cautions that without swift intervention, crucial evidence may be irretrievably lost, jeopardizing both the ongoing lawsuit and public confidence in the regulatory agency.
The SEC’s response to Coinbase’s previous FOIA requests in July and August 2023 was reportedly dismissive, with the agency issuing blanket denials without conducting necessary record checks. Following Coinbase’s legal escalation in June 2024, the SEC requested extensive extensions, claimed compliance with court orders, and did not reportedly initiate searches for the communications until the middle of 2025, by which time many records had already been lost.
The OIG’s findings have illuminated broader issues within the SEC, indicating that communications among over 20 senior officials might also be missing due to similar lapses. Approximately 40 devices have been identified as at risk because of failures in backup systems. The SEC’s practice of neglecting to search for texts unless directed and its lack of notification to requesters about the deletion of relevant records further underline the agency’s shortcomings regarding FOIA compliance.
The allegations against the SEC raise serious concerns about the agency’s adherence to transparency regulations and its role in ensuring fair oversight within the evolving cryptocurrency landscape. As the legal proceedings advance, the implications of these findings could resonate widely, highlighting the need for reform in regulatory practices surrounding digital assets.
