What to know:
- Coinbase secured a $150,000 SEC settlement after its FOIA lawsuit over missing agency records and communications.
- The case revealed that Gary Gensler’s text messages from October 2022 to September 2023 were deleted through an automated process.
- As part of the settlement, the SEC will strengthen record retention policies and disable auto-deletion on devices used by senior officials.
Coinbase has achieved an important milestone in a legal battle that saw the U.S. Securities and Exchange Commission (SEC) agree to pay a $150,000 settlement for failing to produce information in a Freedom of Information Act (FOIA) lawsuit. Documents that could not be found through the Coinbase case include text messages sent by ex-SEC Chair Gary Gensler.
The settlement is yet another chapter in the ongoing battle between Coinbase and the SEC, showing the problems of transparency and record-keeping that exist in the federal government.
Coinbase Forces SEC to Settle FOIA Lawsuit
Coinbase filed several FOIA requests for internal communications of the SEC regarding regulations of cryptocurrency. The platform was trying to gain access to documents and communications that would help in understanding the discussions of the agency on their regulatory approach.
In the event of the non-compliance by the SEC in furnishing the required information to Coinbase, the exchange decided to file a case in federal court.
Chief Legal Officer of Coinbase, Paul Grewal, said that the SEC has agreed to settle the matter for $150,000. Apart from the settlement, the agency is also making efforts to improve the manner in which its official communications are stored.
This deal will require the SEC to improve its record-keeping process in order to ensure that there are no losses of official documents in the future.
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Coinbase Exposes Missing Gary Gensler Texts
One of the key issues raised in the litigation was the deletion of text messages involving the former chairman of the SEC, Gary Gensler.
In the course of the litigation, the court instructed the SEC to turn over internal documents concerning the cryptocurrency policy. It turned out that the texts sent during October 2022 to September 2023 were all deleted.
The SEC explained that it was done because of an automated process of deleting data from government-issued phones.
The situation took a turn for the worse when it was discovered by the Office of Inspector General of the SEC that text messages from top-level management were not being included in the responses to FOIA requests from the agency.
Coinbase made use of the findings mentioned above in the legal proceedings against the SEC.
Another reason for the significance of the case was that the SEC had already fined several firms on Wall Street millions of dollars due to their inability to retain text messages sent by their employees.
SEC Changes Record Rules After Coinbase Settlement
The settlement goes beyond the payment of $150,000. In the deal, the SEC will revise its record retention policy and will disable any automated deletion feature in the government’s equipment that is used by high-ranking officials. Through this measure, the officials’ correspondence will be saved and discoverable under federal laws.
Coinbase wins a legal battle after the SEC dismissed its case against the company. This is because the FOIA settlement comes after the SEC’s case dismissal. Both cases have now been put to bed, which means that the company is a winner, and the FOIA case will transform how the SEC keeps records.
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