Coinbase has reached a settlement with the Securities and Exchange Commission (SEC) following a Freedom of Information Act (FOIA) lawsuit over the destruction of text messages by the agency. The dispute, centering on missing communications from the SEC during a critical period for the crypto sector, has now concluded.
SEC pays $150,000 and updates record policies
Coinbase’s chief legal officer, Paul Grewal, confirmed in an op-ed that the SEC agreed to pay $150,000 and enhance its record-keeping practices as part of the settlement. According to Grewal, this agreement ends a legal battle that started when Coinbase sought information about the SEC’s internal deliberations on cryptocurrency regulation.
The FOIA requests were aimed at obtaining records that might clarify how the SEC was interpreting crypto assets under securities laws. Coinbase pursued these documents citing ongoing regulatory uncertainty, especially as the SEC moved forward with enforcement actions against the company in June 2023.
The SEC initially refused to provide the requested files, prompting Coinbase to escalate the matter to federal court. The case progressed throughout the year as Coinbase pressed for transparency on how the agency arrived at its decisions regarding digital asset classification.
Deleted texts from Chair Gary Gensler
An investigation by the SEC’s inspector general revealed that the agency wiped nearly a full year of text messages from Gary Gensler, who served as SEC Chair, between October 2022 and September 2023. This period included significant events such as the collapse of cryptocurrency exchange FTX and heightened scrutiny of major trading platforms by regulators.
The inspector general found that, before the texts were deleted, the agency had reset Gensler’s phone without first performing a backup. Around 38% of the texts that were recovered were related to official SEC business, including a conversation in May 2023 discussing the timing of enforcement actions targeting crypto exchanges.
Mini dictionary: SEC Inspector General, the independent office within the Securities and Exchange Commission responsible for auditing and investigating the agency’s adherence to policy and legal standards.
| Period Covered | Device Data Status | Share of Recovered Texts on SEC Business |
|---|---|---|
| Oct 2022 – Sep 2023 | Deleted after device reset, no backup | 38% |
Concerns over fair regulatory standards
Paul Grewal underscored the apparent inconsistency in the SEC’s actions, noting the agency had previously fined financial firms over $1 billion for failing to maintain business-related communications. He questioned why the SEC was not held to the same standards, particularly during such a pivotal phase for the cryptocurrency industry.
Grewal wrote that the SEC “destroyed documents they were required to preserve and produce,” emphasizing that the agency’s own Inspector General provided confirmation of these lapses.
For Coinbase, the core issue extended beyond the missing documents. The company positioned its legal challenges as a stand for transparency, highlighting what it described as unclear regulatory expectations for the digital asset sector. Coinbase had launched similar challenges against regulatory pressure that affected access to the US banking system for crypto businesses.
The SEC’s own lawsuit alleging securities violations against Coinbase concluded in early 2025 after new leadership took charge at the agency. Grewal, who played a key role in guiding Coinbase through its disputes with US regulators, plans to step down at the end of July.
With this settlement, Coinbase closes a significant chapter in its campaign for industry regulatory clarity and emphasizes the importance of consistent recordkeeping at institutions responsible for enforcement.
