Coinbase is intensifying its legal battle with U.S. regulators, particularly focusing on allegations concerning past communications from former Securities and Exchange Commission (SEC) Chair Gary Gensler. On Thursday, the cryptocurrency exchange submitted a legal motion seeking a court hearing regarding the SEC Office of the Inspector General’s findings that the agency mistakenly deleted nearly one year’s worth of Gensler’s text messages, along with messages from other senior officials, in what the report characterized as “avoidable” errors.
In this motion, Coinbase contends that the SEC must clarify why it failed to execute a comprehensive search for agency records, especially text messages from Gensler and senior officials, which were requested through multiple Freedom of Information Act (FOIA) filings made in 2023 and 2024. The exchange is calling for the court to compel the SEC to locate and produce all relevant communications initially sought, specifically those related to Ethereum’s transition to a proof-of-stake (PoS) consensus mechanism.
The FOIA filing states, “This Court’s intervention is warranted to determine whether the SEC has in fact violated the Court’s prior orders and to ensure that all available measures are taken to preserve and produce responsive records.” Furthermore, Coinbase has proposed an additional hearing following the discovery phase to discuss further remedies, including potential attorney fees. The motion outlines that after reviewing the materials produced, the parties involved can return to the court to determine any necessary additional actions, including those that might prompt a Special Counsel investigation.
In response, SEC representatives stressed the agency’s commitment to transparency in its operations and accountability to taxpayers. An SEC spokesperson noted that when Chairman Gary Gensler was briefed on the matter, he quickly instructed staff to investigate the issue and implement measures to prevent similar occurrences in the future.
The situation underscores a longstanding demand from cryptocurrency firms for greater transparency from the SEC concerning its communications related to enforcement actions against crypto projects. This lack of clarity has contributed to a notable exodus of companies from the U.S. market.
According to the SEC Inspector General’s investigative report, Gensler’s text messages from October 2022 to September 2023 were automatically deleted by the SEC’s IT department before they could be archived—a revelation that has raised several concerns about regulatory processes.
The SEC initiated a lawsuit against Coinbase in 2023, alleging that the exchange operated as an unlicensed securities broker, a charge that has also been levied at various other crypto companies during Gensler’s tenure. In light of this, Coinbase has petitioned the U.S. courts to secure Gensler’s personal emails, arguing that these communications could offer crucial insights relevant to their ongoing legal disputes with the SEC.
