Coinbase Demands Sanctions Over Destroyed SEC Communications

Coinbase has filed a motion demanding court sanctions against the U.S. Securities and Exchange Commission (SEC) after discovering that nearly a year’s worth of messages from former Chair Gary Gensler were permanently deleted.

These communications spanned from October 2022 to September 2023, a period marked by major crypto events like the FTX collapse and enforcement actions against the exchange.

Sanctions and an Investigation

Coinbase, working through History Associates, has told a federal court that the SEC’s actions violated the Freedom of Information Act (FOIA). This follows a recent report by the agency’s Office of Inspector General (OIG) that revealed major failures in how it handled information.

The department shared that former Chair Gensler’s texts, which included exchanges on crypto enforcement actions, settlements, and speeches, had been permanently deleted under a strict device wiping policy.

Coinbase Chief Legal Officer Paul Grewal described the situation as a “gross violation of public trust,” calling on the federal court to take measures “to ensure that it never happens again.”

Coinbase argued in its filing that although the SEC has held private companies accountable for record-keeping failures, it has neglected its responsibilities. The company believes that the agency’s behavior shows a “blatant double standard” and demonstrates “a pattern of evasion and delay.”

The exchange is now asking the court to push for faster searches of the remaining records and for it to allow an investigation into how official communications were destroyed. It also urged the authorities to consider sanctions against the SEC, warning that without quick action, there is a “serious risk of further loss of evidence” that could damage the lawsuit and public trust.

SEC Accused of Breaking FOIA Rules

In July and August 2023, Coinbase filed FOIA requests asking for messages between Gensler and other officials about Ethereum and related enforcement actions. However, the SEC responded with blanket denials without even checking the records.

When the firm took the matter to court in June 2024, the agency delayed reviews, asked for long extensions, and claimed it was following court orders. Additionally, it did not begin looking for the communications until April and June 2025, by which time many of the records had already been destroyed.

The OIG’s findings showed that exchanges between more than 20 other senior officials may have been lost, while about 40 devices remain at risk due to backup failures. It also revealed that the SEC did not search texts during reviews unless specifically instructed and also failed to inform requesters when relevant records had been deleted.

According to the filing, this is evidence that the agency violated FOIA rules, disobeyed court orders, and caused irreparable harm by allowing the information to be lost.