Coinbase Settles FOIA Suit With SEC Over Destroyed Text Messages; Agency to Pay $150,000

According to Paul Grewal in a Wall Street Journal op-ed published Wednesday, Coinbase has settled its Freedom of Information Act lawsuit with the SEC. Under the settlement terms, the SEC will pay $150,000 and commit to repairing its record-retention policies.

The case centered on text messages from former SEC Chair Gary Gensler covering October 2022 to September 2023, which the SEC's own inspector general found had been deleted after the agency reset his phone before a backup was made. That 12-month window covered the FTX collapse and the SEC's enforcement push against crypto exchanges; 38% of the recovered texts involved agency business, including a May 2023 message about enforcement timing. Grewal noted the irony: under Gensler, the SEC had levied over $1 billion in fines on financial firms for losing employee records, yet failed to preserve its own chair's communications during a critical period for crypto regulation.