Coinbase Accuses SEC of Erasing Gensler Texts and Seeks Court Sanctions

Highlights:

• Coinbase has accused the SEC of undermining transparency by failing to preserve records during critical market shifts.
• Coinbase has noted that the deleted SEC texts block clarity on decisions made during major crypto industry events.
• The court will soon decide on sanctions after nearly a year of Gary Gensler’s texts being permanently lost.

Coinbase has asked a federal court to impose sanctions on the U.S. Securities and Exchange Commission after confirming the permanent deletion of nearly a year of Gary Gensler’s text messages. Coinbase filed the motion in Washington on Thursday to support ongoing litigation by History Associates, a research group seeking the communications under the Freedom of Information Act.

🗣️ Coinbase cited an inspector general report alleging that the SEC had deleted Gary Gensler’s text messages over the past year. 🗣️

🔗 Paul Grewal, Chief Legal Officer at Coinbase, stated that the company has asked a federal court to "review this egregious breach of public… pic.twitter.com/WeZVoVyHCR

— Crypto Research Network (@CrResearchNet) September 12, 2025

The SEC employed an internal device policy that automatically erased texts if a phone stayed offline for 45 days. The agency Office of Inspector General investigated, confirmed the deletions, and warned that the SEC may have lost other senior officials’ records. The watchdog questioned whether the agency properly protected and maintained its official records.

For Coinbase, the timing of the deletions is central to its complaint. The missing texts cover a turbulent period in the digital asset industry. For instance, the collapse of FTX, Ethereum’s shift to proof of stake, and a series of enforcement actions against trading platforms. Attorneys representing History Associates believe the SEC ignored a court order. Moreover, the regulatory body failed to search text messages for relevant documents and communications. They claim the SEC violated discovery rules by omitting the texts and argue the failure should trigger sanctions.

Coinbase Accuses SEC of Undermining Transparency in Crypto Oversight

Coinbase contends that the disappearance of Gensler’s texts prevents proper scrutiny of how the SEC shaped its policies on cryptocurrencies. The exchange says internal communications could have revealed debates on enforcement strategies. In addition, the communications could have revealed the exact timing of decisions against industry participants. Without these records, Coinbase argues, the public has an incomplete picture of the agency’s approach during a decisive year for digital assets.

The Gensler SEC destroyed documents they were required to preserve and produce. We now have proof from the SEC’s own Inspector General. Today we ask the federal court to address this gross violation of public trust to ensure that it never happens again. 1/3 pic.twitter.com/DPLtHUiolj

— paulgrewal.eth (@iampaulgrewal) September 11, 2025

The filing states that the SEC conducted narrow searches, delayed producing documents, and disclosed the record loss only after significant delays. Lawyers claim the SEC’s actions hinder transparency and due process while the industry faces major upheavals. They add that the court should hold the agency to the same standards it enforces on private companies. Coinbase noted that regulators fined firms heavily for failing to maintain adequate records.

Coinbase is also seeking expedited discovery to determine the full extent of the losses. In addition, it seeks to determine whether the SEC tried to recover the communications. The company maintains that accountability is essential, especially when records may have influenced decisions on Ethereum and enforcement strategies that shaped the market.

Court Expected to Weigh Sanctions in Coming Weeks

The court will now deliberate on the suitability of sanctions. The judges may order further searches, restrict the SEC’s arguments, or issue other remedies. According to lawyers, in cases where the records are destroyed, courts tend to consider intent. Meanwhile, the destruction of potential evidence post-formal request is given serious consideration.

The SEC has since turned off text messaging on agency devices in response to the controversy, informed the National Archives, and committed to enhancing recordkeeping systems. Nevertheless, the critics believe that these measures were taken when the damage had already been done, which constrained their effects in restoring transparency. A decision on sanctions is expected in the coming weeks.