Coinbase has accused the U.S. Securities and Exchange Commission of “destroying” former Chair Gary Gensler’s text messages, with industry observers calling it a “credibility crisis” that could weaken the regulator’s position in future enforcement actions.

"The Gensler SEC destroyed documents they were required to preserve and produce,” Coinbase Chief Legal Officer Paul Grewal tweeted Thursday, alongside a link to the court filing. “We now have proof from the SEC‘s own Inspector General."

A report last week by the SEC’s Office of the Inspector General found that nearly a year of then-Chairman Gary Gensler‘s text messages were permanently deleted between October 2022 and September 2023.

The SEC watchdog said the agency employs a policy of remotely wiping devices disconnected from the agency‘s network for 45 days.

Coinbase, through third‐party private historical research firm History Associates, has asked the U.S. District Court for the District of Columbia to impose sanctions, order expedited discovery, and compel immediate production of all responsive communications. 

The agency’s "destroy-and-delay approach to records must end immediately,” the filing reads, adding the destruction has caused “irreparable harm” that cannot be undone

“The SEC has fined private firms billions for poor recordkeeping, but now stands accused of doing the very same thing itself,” Rishabh Gupta, Director at Web3 platform Trade Dog Group, told Decrypt. “This creates a profound ‘do as I say, not as I do’ problem that severely undermines the SEC’s moral authority.”

The deletion timeline coincided with the FTX collapse, the SEC‘s crypto enforcement blitzkrieg, and ongoing Freedom of Information Act litigation, in which Coinbase sought internal agency communications regarding Ethereum regulation and digital asset policy decisions.

The SEC initially denied the requests under law enforcement exemptions, but abandoned that position after Coinbase filed suit in June 2024.

The Inspector General also identified potential record losses from devices belonging to over 40 other senior SEC officials, including 21 devices flagged for confirmed or suspected data destruction.

Had the SEC conducted proper searches when the FOIA requests were submitted in 2023, "the agency could have reviewed and processed those records then, or at least taken steps to preserve them,” before Gensler’s texts were destroyed, the filing reads.

“The reported erasure of key communications raises significant questions around transparency and accountability,” Shiv Pande, CBO at crypto startup BitSave, told Decrypt. “Regulatory positions carry the heavy responsibility of gatekeeping, where decisions must be anchored in fair principles and objective evidence.”

If sanctions are imposed, Gupta said, it would “create a legal precedent” that allows defendants to challenge not only the SEC’s theories but also its “credibility and thoroughness” in handling evidence. 

That, he warned, could “delay or complicate ongoing enforcement actions” as companies push back more aggressively, making settlements harder and forcing the agency to defend its own internal processes.

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