Coinbase Settles SEC Lawsuit Over Deleted Gensler Texts

Coinbase has officially settled its Freedom of Information Act lawsuit against the Securities and Exchange Commission. The legal clash centered on missing records from former SEC Chair Gary Gensler, which the agency admitted were wiped from his phone without proper backups. Under the settlement agreement, the SEC will pay 150,000 dollars and commit to updating its record retention policies.

The conflict began in 2023 when Coinbase requested documents to understand how the SEC determined its regulatory stance on crypto. During the legal process, the agency's own inspector general discovered that text messages from October 2022 to September 2023 were deleted. This period was significant, as it included the collapse of FTX and a major uptick in enforcement actions against the digital asset industry.

Coinbase legal chief Paul Grewal noted the irony of the situation, as the SEC previously fined other financial firms for failing to preserve employee communications. By holding the agency to the same standards it applied to the private sector, Coinbase framed this settlement as a victory for government transparency. This agreement marks one of the final chapters in a tense multiyear period between the exchange and the regulator.

As the legal dust settles, the industry is left with a reminder about the importance of consistent recordkeeping by public officials. While the SEC case against Coinbase has largely faded under the new administration, this settlement serves as a final public correction for the agency's internal mismanagement.