Crypto Reporter
Shalini Nagarajan
Crypto Reporter
Shalini Nagarajan
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Coinbase has accused the US SEC of destroying nearly a year of text messages from former Chair Gary Gensler, urging a federal court to impose sanctions on the regulator.
The company says the lost records cut into its ability to scrutinize how the agency shaped its aggressive stance on cryptocurrencies under Gensler.
The accusation came through in a Thursday filing in Washington, where Coinbase is backing litigation by History Associates, a research group that sought Gensler’s communications under the Freedom of Information Act.
Device Policy Blamed As Nearly A Year Of Gensler’s Messages Disappear
Lawyers for the group argue the SEC failed to hand over relevant records, and also allowed them to be wiped by a device policy that automatically deleted texts if a phone remained offline for more than 45 days.
An investigation by the SEC’s Office of Inspector General confirmed that Gensler’s messages between Oct. 2022 and Sept. 2023 were erased. The watchdog found other senior officials may also have lost records, raising broader concerns about the agency’s recordkeeping practices.
For Coinbase, the gap is far from theoretical. The period covers a turning point for digital assets, including Ethereum’s transition to proof of stake, FTX’s collapse, and a wave of enforcement actions against exchanges.
Internal texts could reveal how the regulator debated strategies and when it chose to act.
Coinbase Seeks Judicial Action To Expose Gaps In SEC Transparency
In the filing, lawyers for History Associates said the SEC failed to search text messages. This happened despite court orders requiring the production of “all documents and communications.” They argued that the omission violated discovery rules. As a result, they said it could justify sanctions.
At the same time, the dispute over lost texts comes after months of friction between the agency and Coinbase. The company has long accused the SEC of regulating by enforcement rather than setting clear rules.
Now, by pressing the court to step in, Coinbase aims to draw attention to what it sees as gaps in transparency and due process.
Company Argues Regulator Should Face Consequences For Erased Messages
Legal experts say courts take the destruction of potential evidence very seriously. The concern grows stronger when records disappear after a formal request has been filed.
Judges may impose sanctions that range from ordering additional searches to restricting the SEC’s arguments in court. However, they often weigh intent and ask whether the loss was deliberate.
Meanwhile, Coinbase is pushing to ensure the agency faces consequences. The company argues the court should not let the regulator benefit from what it calls an avoidable loss of key communications.
Looking ahead, the court is expected to decide on the next steps in the coming weeks. A ruling in favor of sanctions could intensify the SEC’s challenges. On the other hand, a decision siding with the regulator would likely invite more criticism that accountability remains out of reach.
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