Coinbase Demands SEC Accountability Over Lost Gensler Texts - Regulatory Transparency Crisis Deepens

Coinbase just dropped a bombshell on the SEC—demanding answers for 'lost' Gensler texts that mysteriously vanished from agency records. The exchange isn't buying the 'technical glitch' excuse and wants full transparency yesterday.

Regulatory Runaround

Gary Gensler's SEC can't seem to keep its digital paperwork straight—convenient timing given the ongoing crypto crackdown. Coinbase's legal team filed formal demands for preservation of all remaining communications, citing potential regulatory evasion.

Selective Amnesia

The missing texts cover critical periods when the SEC was formulating its enforcement strategy—because nothing says 'regulatory clarity' like disappearing evidence. Wall Street veterans are shrugging—just another Tuesday at the finance circus where the regulators play by different rules.

Accountability Showdown

Coinbase's move signals growing industry frustration with regulatory arbitrariness. When the watchdogs can't watch their own communications, maybe it's time to question who's really being watched—and why some messages are apparently too sensitive for the record.

Timeline of Missing Messages

The missing texts stretch from October 18, 2022 to September 6, 2023. This includes key moments like the collapse of FTX and a series of high-profile enforcement actions. According to an internal report, the texts were wiped when Gensler’s government-issued phone was reset. 

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 SEC had a policy in place to wipe inactive devices, and unfortunately, backups were not up to date. Once the reset happened, everything was gone, including logs that might have helped track what went wrong.

Coinbase Sees More Than a Technical Issue

Coinbase says this is not just a technical slip. They point out that the SEC was under court orders to preserve all communications related to crypto policy. That includes text messages. The fact that the SEC never searched for or turned over these messages raises serious concerns. Coinbase notes that nearly 40 percent of the messages that were recovered touched on enforcement or policy. These were not just casual exchanges. They could have mattered in shaping how the SEC approached crypto during a critical time.

Details from the Inspector General’s Report

The SEC’s internal watchdog confirmed several problems. Gensler’s device had stopped syncing with the agency’s system for more than two months. After 45 days of no contact, the wipe policy kicked in. When the phone was reset, it took out the texting app and all of its contents. Because logs were missing or incomplete, the full timeline could not be reconstructed. This left gaps in what investigators could verify.

How the SEC Responded

In the wake of the issue, the SEC took a few corrective steps. Senior officials can no longer send texts from agency devices. Backup protocols have been updated, and new training has been rolled out. The SEC also told the National Archives that records had been lost. But Coinbase says this is not enough. The company wants the court to force the SEC to hand over all communications involving crypto regulation and to take responsibility for what was lost.

Why It Matters

These missing texts were sent during a time when the SEC was taking a more aggressive approach to crypto. If messages about those decisions were lost, it WOULD affect how companies can defend themselves in court. It also raises bigger questions about how much the public can trust regulatory transparency. Agencies have to follow the same rules they enforce. When they don’t, the damage is not just technical, it’s institutional.

What Could Happen Next

Coinbase is asking for more than just the texts. They want accountability. They want the SEC held to the same standards as everyone else. The court will decide if sanctions are needed and how far discovery should go. This could set a precedent for how government agencies handle internal communications, especially during major industry crackdowns.

Key Takeaways

• Coinbase filed a motion demanding sanctions and fast discovery after learning that former SEC Chair Gary Gensler’s texts were deleted.
• The missing texts span major crypto events, including the FTX collapse, and may have included policy discussions the SEC was required to preserve.
• An internal report revealed that Gensler’s phone was reset under a device-wipe policy, and incomplete backups left the messages unrecoverable.
• Coinbase argues this isn’t just a tech issue, but a serious failure to follow legal obligations during a period of intense crypto enforcement.
• The outcome could impact how government agencies handle record-keeping and transparency during industry crackdowns going forward.