Coinbase has secured a $150,000 settlement from the U.S. Securities and Exchange Commission after the regulator lost nearly 11 months of former Chair Gary Gensler’s text messages.
Summary
- SEC will pay Coinbase $150,000 after losing Gary Gensler’s crypto-related text messages.
- An SEC watchdog blamed avoidable IT failures and a factory reset for the loss.
- The settlement requires the regulator to revise its policies for preserving official communications.
A Wall Street Journal op-ed written by Coinbase Chief Legal Officer Paul Grewal disclosed the agreement on July 22, bringing the exchange’s Freedom of Information Act lawsuit against the agency to an end.
Under the settlement, the SEC will pay Coinbase $150,000 and revise its record-retention policies, according to Grewal.
Coinbase filed the case while seeking internal SEC records about how senior officials handled crypto regulation and enforcement. The exchange also sued the Federal Deposit Insurance Corporation in 2024 for documents that it believed could show coordinated attempts by U.S. regulators to restrict crypto companies’ access to financial services.
The disputed SEC records included messages exchanged between Gensler and other agency officials. Grewal wrote that the regulator attributed the loss to a process that “automatically wiped” certain data, even though Coinbase had requested communications connected to crypto policy decisions.
SEC failures erased months of records
A September 2025 review by the SEC Office of Inspector General found that avoidable errors caused the loss of Gensler’s messages. The missing texts covered Oct. 18, 2022, through Sept. 6, 2023, a period when the agency was pursuing several enforcement actions involving digital assets.
According to the Inspector General’s report, SEC technology staff performed a factory reset on Gensler’s agency-issued iPhone on Sept. 6, 2023, after he could no longer access SEC applications. The reset permanently deleted the phone’s data before staff completed a usable backup.
Although the Office of Information Technology backed up the device later that afternoon, the Inspector General found that the messages could no longer be recovered. The report concluded that a timely backup and earlier action to improve recordkeeping would have prevented the loss.
SEC technology staff had announced an initiative to disable texting on agency devices in October 2022, according to the review. However, the office postponed enforcement while it developed an exemption process and prepared for a possible government shutdown, leaving Gensler’s phone without another backup before the reset.
The SEC eventually removed the texting application from agency devices in March 2024, the Inspector General reported. A separate notice submitted to the National Archives and Records Administration also disclosed that the agency later found problems searching for and recovering messages from the SEC-issued phones of five other senior officials.
Following the Inspector General’s findings, Grewal accused the former SEC leadership of violating its public obligations by losing material Coinbase had sought. In a September 2025 post, the legal chief wrote that the agency destroyed “documents they were required to preserve and produce.”
“The Gensler SEC did this even though we asked for information about ‘all communications’ within the SEC related to crypto regulatory and enforcement decision-making years ago.”
Coinbase’s disclosure fight predates the settlement
Coinbase’s pursuit of SEC communications had also appeared in the agency’s former enforcement lawsuit against the exchange. In July 2024, Coinbase asked a New York federal court to compel the regulator to produce documents tied to Gensler’s internal discussions during his tenure, which began in 2021.
After resistance from the SEC and U.S. District Judge Katherine Polk Failla, Coinbase narrowed an earlier request that had covered Gensler’s communications from both before and during his chairmanship. Its July 23 motion focused on records from his time leading the agency.
Subpoena Request No. 23 sought documents connected to Gensler’s public speeches about digital-asset regulation. Grewal argued at the time that those materials “bear directly on the claims the SEC now asserts.”
According to Coinbase’s motion, the SEC had declined to search beyond its Enforcement Division’s investigative files, citing relevance and the burden involved. The exchange also claimed that the regulator would not run searches across custodians’ email accounts or establish a system to produce responsive documents or list withheld records.
Those requests emerged as Coinbase defended itself against SEC allegations that it operated an unregistered securities exchange, broker and clearing agency. Under the Trump administration, the commission dismissed the enforcement case in February 2025 without requiring Coinbase to pay a fine or change its business practices.
As reported by crypto.news, Coinbase has since supported federal crypto legislation, including the stablecoin framework approved by Congress, while CEO Brian Armstrong and Grewal have pressed lawmakers to advance the CLARITY Act. The SEC has also started developing policies for tokenized securities and other digital-asset products under its post-Gensler leadership.
The latest settlement resolves Coinbase’s FOIA dispute while requiring the regulator to change how it preserves official communications. Grewal’s account places the $150,000 payment alongside those recordkeeping reforms, tying the financial award directly to messages the Inspector General determined were lost through preventable agency failures.
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