Coinbase settled its Freedom of Information Act lawsuit against the Securities and Exchange Commission on Wednesday, ending a legal battle over text messages from former SEC Chair Gary Gensler that the agency destroyed. Chief legal officer Paul Grewal disclosed the settlement in a Wall Street Journal op-ed, revealing the SEC will pay $150,000 and revise its record-retention policies. The dispute originated from Coinbase's 2023 FOIA requests seeking records showing how the SEC classified crypto assets as securities, the central issue in the enforcement suit the agency filed against Coinbase in June 2023. The SEC's inspector general found that Gensler's text messages from October 2022 to September 2023 were wiped after the agency reset his phone before creating a backup. This occurred during a period when the SEC pursued aggressive enforcement against crypto exchanges and levied over $1 billion in fines on financial firms for losing employee communications.
SEC Pays $150,000 and Commits to Policy Reforms
Under the settlement terms Grewal outlined, the SEC will pay Coinbase $150,000 and repair its record-retention policies. Coinbase filed FOIA requests in 2023 for records that might show how the SEC decided to treat crypto as securities. The SEC denied the requests, and the case moved to court. The SEC brought an enforcement suit against Coinbase in June 2023. That case fell away in early 2025 under a new administration and a new chair. Paul Grewal plans to leave Coinbase at the end of July.
Inspector General Confirms Text Message Destruction
The SEC's inspector general found that close to a year of Gary Gensler's text messages, from October 2022 to September 2023, had been wiped after the agency reset his phone before a backup was made. That window covered the collapse of FTX and the agency's hardest push against crypto exchanges. The watchdog found that 38% of the recovered texts touched agency business, including a May 2023 exchange on the timing of enforcement against trading platforms. Grewal stated the company now has proof from the SEC's own Inspector General that the Gensler SEC destroyed documents they were required to preserve and produce.
SEC Levied $1 Billion in Fines for Similar Violations
Under Gensler, the SEC had levied more than $1 billion in fines on financial firms for losing employee messages. The agency had said everybody should play by the same rules. Yet it lost its own chair's texts during what Coinbase described as the most consequential stretch in crypto's short history. Coinbase had cast its transparency suits, including a challenge to the SEC and FDIC over pressure on crypto's banking access, as proof that regulators leaned on the industry without clear rules.
FAQ
What did Coinbase's settlement with the SEC include?
The SEC will pay Coinbase $150,000 and repair its record-retention policies. The settlement resolved Coinbase's Freedom of Information Act lawsuit over destroyed text messages from former SEC Chair Gary Gensler.
What text messages did the SEC destroy?
The SEC's inspector general found that Gary Gensler's text messages from October 2022 to September 2023 were wiped after the agency reset his phone before a backup was made. The watchdog found that 38% of the recovered texts touched agency business, including a May 2023 exchange on the timing of enforcement against trading platforms.
How much did the SEC fine other firms for losing employee messages?
Under Gensler, the SEC levied more than $1 billion in fines on financial firms for losing employee messages. The agency stated that everybody should play by the same rules.
