Coinbase has dragged the US SEC over the deletion of Gary Gensler’s text messages between October 2022 and September 2023.
American cryptocurrency exchange Coinbase has called out the United States Securities and Exchange Commission (SEC) over some suspicious move involving Gary Gensler, the former chairman of the agency. The exchange has asked the federal court to address the agency’s latest gross violation of public trust.
Coinbase Makes New Demands on Gensler’s Missing Communication
According to a filing sent to the court on Sept. 11 through History Associates, Coinbase claims that the SEC erased a year of Gary Gensler’s text messages. It referred to a Sept. 3 report from the Inspector General, citing that the Commission excluded officials’ text messages while it was processing FOIA requests. It is worth noting that much of this communication qualifies as agency records subject to FOIA.
On this premise, Coinbase CLO Paul Grewal noted that the exchange has requested that the federal court address the gross violation of public trust. He also urged the court to ensure that there is no recurrence of such a situation. Coinbase is asking for an “expedited discovery, sanctions, and immediate production of all responsive texts.”
It is worth noting that the SEC took the step of erasing almost a year’s worth of text messages sent and received by Gensler under a new policy back in September 2023. It turns out that the agency’s IT staff initiated a factory reset of the smartphone. This led to the permanent deletion of the device’s data, which includes nearly a year’s worth of text messages.
Per the exact timeline, Gensler’s texts from October 2022 through September 2023 were all lost. The Inspector General claimed that the message could still have been preserved. The said period cut across the time when the SEC was busy cracking down on some of the largest crypto exchanges, including Binance, Kraken, and even Coinbase.
Also, it overlapped the season that Bahamian-headquartered FTX imploded. Coinbase is concerned about the sudden deletion, considering that it has requested information about ‘all communications’ within the SEC. These are details related to crypto regulatory and enforcement decision-making from years ago.
Unending Transparency Fight
The American crypto exchange also requested transparency on the financial burden of regulatory actions taken during the former SEC Chair’s tenure. Coinbase was keen on determining whether the SEC’s enforcement approach justified the use of public funds or an excessive crackdown that hindered innovation in the crypto industry.
To ensure that the documents were delivered, Coinbase had promised to offset the necessary processing fees. It made this move after noting that certain information was missing from the documents provided to Congress. Despite the efforts, the commission still failed to provide the information, and this led the exchange to sue the SEC and the Federal Deposit Insurance Corporation (FDIC).
Notably, this lawsuit was also tied to a probe into “Ethereum 2.0” and Operation Chokepoint 2.0. The aforementioned agencies were accused of urging banking institutions to “pause all crypto asset-related activities.”
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