Coinbase Calls for SEC Sanctions Over Gensler's Missing Texts

Coinbase Presses SEC on Missing Gensler Communications

Coinbase has escalated its dispute with the U.S. Securities and Exchange Commission (SEC), urging a federal court to impose sanctions on the agency. This action follows the discovery that nearly a year of former Chair Gary Gensler's text messages were deleted, raising concerns about transparency and compliance with the Freedom of Information Act.

According to Coinbase, the missing communications obstruct the proper review of Ethereum and broader crypto policies, potentially damaging public trust. The company's filing alleges that the SEC failed to fully comply with orders to provide complete records on digital asset matters.

Key Concerns Raised by Coinbase:

• Delayed Searches: The SEC allegedly delayed searches and used overly narrow search terms.
• Late Disclosure: The agency reportedly failed to promptly disclose the loss of records.
• Impact on Policy Review: Coinbase argues these actions hindered a proper review of information crucial for understanding the SEC's approach to digital assets.

An SEC Inspector General report confirmed that Gensler's texts from October 2022 to September 2023 were permanently erased due to a policy of remotely wiping devices disconnected from the SEC network for over 45 days. This period notably includes the collapse of FTX and significant enforcement actions, including cases involving Coinbase.

Recordkeeping Crisis Extends Beyond Gensler

The Inspector General's report indicates the problem isn't isolated to Gensler. Texts from over 20 other senior SEC officials may be missing, and nearly 40 additional officials had devices without proper backups. This raises the specter of further critical records being lost or at risk of disappearing.

Coinbase is demanding expedited discovery to ascertain the extent of record destruction, the steps taken for recovery, and the reasons for non-disclosure. The company emphasizes that the SEC should adhere to the same stringent recordkeeping standards it imposes on private firms, having levied over a billion dollars in fines for related violations.

The filing underscores that the deleted texts coincide with a particularly turbulent period in crypto regulation, casting a shadow over the SEC's credibility in digital asset oversight.