Coinbase has secured a $150,000 settlement from the US Securities and Exchange Commission (SEC) after the regulator permanently lost almost 11 months of text messages from former chair Gary Gensler’s official mobile phone – a period when the agency was stepping up its crackdown on crypto firms.
The agreement, revealed in a Wall Street Journal opinion piece by Coinbase chief legal officer Paul Grewal on 22 July, brings to a close the exchange’s Freedom of Information Act (FOIA) lawsuit against the SEC.
Under the deal, the SEC will pay Coinbase $150,000 and overhaul its internal record‐retention procedures.
Nearly a year of Gensler messages wiped
The dispute centred on internal SEC records, including text messages between Mr Gensler and senior officials, which Coinbase had sought as it tried to understand how the regulator was shaping crypto policy and enforcement.
According to Mr Grewal, the SEC told the company that a process had “automatically wiped” certain data, even though Coinbase had specifically asked for communications connected to crypto regulatory and enforcement decisions.
A review published in September 2025 by the SEC’s Office of Inspector General concluded that “avoidable errors” led to the loss of the messages. The missing texts covered the period from 18 October 2022 to 6 September 2023 – a time when the SEC was pursuing multiple enforcement actions involving digital assets.
The Inspector General’s report found that technology staff at the SEC carried out a factory reset on Mr Gensler’s SEC‐issued iPhone on 6 September 2023, after he reported being unable to access agency applications. The reset erased the device’s data before a usable backup had been completed.
Although the Office of Information Technology created a backup later that day, investigators determined that the messages could no longer be recovered. The report said that a timely backup and earlier steps to strengthen recordkeeping “would have prevented the loss”.
Delayed texting crackdown left gap in records
The Inspector General’s review noted that SEC technology staff had announced plans in October 2022 to disable texting on agency devices. However, enforcement of that initiative was postponed while officials developed an exemption process and prepared for a possible federal government shutdown.
As a result, Mr Gensler’s phone was not subject to another backup before the September 2023 reset.
The texting application was ultimately removed from SEC‐issued devices in March 2024. In a separate notice to the National Archives and Records Administration, the SEC later disclosed that it had also identified problems searching for and recovering messages from the agency phones of five other senior officials.
Following the Inspector General’s findings, Mr Grewal accused the then SEC leadership of breaching its obligations to preserve material requested by Coinbase. In a post published in September 2025, he wrote that the agency had 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.”
Disclosure battle spilled into enforcement case
Coinbase’s hunt for SEC communications also featured in the regulator’s former enforcement lawsuit against the exchange.
In July 2024, Coinbase asked a federal court in New York to order the SEC to hand over documents linked to Mr Gensler’s internal discussions during his tenure as chair, which began in 2021.
After pushback from the SEC and US District Judge Katherine Polk Failla, Coinbase narrowed an earlier, broader subpoena that had sought Mr Gensler’s communications from both before and during his time leading the commission. Its 23 July motion focused only on records from his chairmanship.
One request – Subpoena Request No. 23 – targeted documents relating to Mr Gensler’s public speeches on digital‐asset regulation. At the time, Mr Grewal argued that those materials “bear directly on the claims the SEC now asserts.”
Coinbase’s filing said the SEC had refused to search beyond its Enforcement Division’s investigative files, citing relevance concerns and the administrative burden. The exchange also claimed the commission declined to run searches across officials’ email accounts or to set up a system to produce responsive documents and list records it withheld.
Those disputes unfolded as Coinbase fought allegations that it had operated an unregistered securities exchange, broker and clearing agency. Under the Trump administration, the SEC dropped that enforcement case in February 2025 without imposing a fine or forcing changes to Coinbase’s business model.
FOIA case ends as US policy moves beyond Gensler era
The latest settlement resolves Coinbase’s FOIA litigation while obliging the SEC to tighten how it preserves official communications across the agency.
Mr Grewal’s account presents the $150,000 payment and the recordkeeping reforms as directly linked to the text messages the Inspector General said were lost through preventable internal failures.
Since the collapse of the enforcement action, Coinbase has thrown its weight behind federal crypto legislation, including the stablecoin framework approved by Congress. Chief executive Brian Armstrong and Mr Grewal have also pressed lawmakers to advance the CLARITY Act, which aims to provide a clearer regulatory structure for digital assets.
Under leadership that succeeded Mr Gensler, the SEC has begun developing policies for tokenised securities and other digital‐asset products, signalling a shift in approach even as the agency moves to repair shortcomings in how it manages and preserves its own records.
