In a bold move against U.S. regulators, cryptocurrency giant Coinbase has filed a federal court motion demanding sanctions and accountability from the Securities and Exchange Commission (SEC) following the revelation that nearly a year of text messages from former Chair Gary Gensler were permanently deleted. The filing, submitted on September 11, 2025, accuses the SEC of “destroying” critical documents during a pivotal period in crypto enforcement, raising serious questions about transparency and record-keeping practices.
The controversy stems from an SEC Office of the Inspector General (OIG) report released on September 3, which detailed “avoidable” errors leading to the loss of Gensler’s texts from October 2022 to September 2023. This timeframe coincides with major industry upheavals, including the FTX collapse and the SEC’s aggressive lawsuits against crypto firms. Gensler’s government-issued phone was factory-reset under an agency policy that wipes inactive devices after 45 days offline, before backups could capture the messages. The OIG flagged potential losses from over 40 other senior officials’ devices, noting that 40% of recovered texts involved enforcement or policy discussions.
Coinbase’s action builds on its ongoing 2023 lawsuit, where the SEC alleged the exchange operated as an unlicensed securities broker. Through ally History Associates, Coinbase claims the SEC violated Freedom of Information Act (FOIA) requests and court orders by failing to search officials’ texts for responsive communications, particularly on Ethereum’s proof-of-stake transition. In 2023 FOIA filings, Coinbase sought “all communications” on crypto regulations, but the SEC initially denied them under exemptions, later abandoning that stance.
Chief Legal Officer Paul Grewal decried the deletions as a “gross violation of public trust,” highlighting hypocrisy: Under Gensler, the SEC fined firms over $1 billion for similar record-keeping lapses, preaching “everybody should play by the same rules.” Coinbase requests an expedited hearing, full document production, attorney fees, and possibly a special counsel probe to prevent further losses.
Industry observers view this as a “credibility crisis” for the SEC, potentially weakening its cases amid shifting political winds post-Gensler’s resignation after the 2024 election. The motion underscores broader crypto frustrations with opaque regulation, which has driven innovation overseas. As the hearing looms, it could reshape U.S. digital asset oversight, forcing greater accountability from watchdogs.