Coinbase filed a federal court motion alleging the SEC failed to preserve nearly a year of text messages from former chair Gary Gensler. The company argues the absence of these communications undermines fairness in investigations and its right to a fair defense. It seeks penalties and expedited information gathering to determine the scope of the alleged record suppression.
Allegations, timeline, and requested actions
Coinbase states the SEC deleted messages from October 2022 to September 2023, a period that coincides with major industry events such as the FTX collapse and Ethereum’s shift to proof-of-stake (PoS). The motion asks the court to impose penalties and order fast information gathering to establish the extent of the alleged suppression of records.
A September 3 report from the SEC’s Office of the Inspector General (OIG) states the agency erased nearly a year of Gensler’s phone messages. Coinbase argues these communications could contain information about enforcement decisions that directly affect its defense. Paul Grewal, Coinbase’s chief legal officer, said publicly and on social media that Gensler’s SEC destroyed documents they were required to keep and provide, adding that the OIG report itself supports this claim.
The motion also asks the court to compel the SEC to find and produce all relevant communications. Coinbase previously sought these records under the Freedom of Information Act (FOIA), including exchanges about Ethereum’s change to PoS. The company maintains that the absence of these records could reveal differences in the SEC’s enforcement approach, which it considers crucial to proper legal action.
Legal context and potential implications
Coinbase’s petition alleges a FOIA violation and requests penalties, along with expedited information gathering to identify who is responsible and to restore the chain of custody for documents. According to the motion, the SEC has not issued a public response to these accusations.
The case could carry wide procedural consequences. If the court determines that the message deletion amounted to evidence destruction, it could set a precedent for preserving internal communications in regulatory proceedings and lawsuits related to digital assets.
Proof-of-stake (PoS) is a protocol change that alters how blocks are validated. Coinbase seeks any SEC communications about Ethereum’s transition to PoS because those records could matter for enforcement decisions.
The outcome may influence the clarity of crypto regulation and companies’ access to regulators’ internal evidence. It could also shape future procedures for retaining electronic communications within federal agencies. The disputed period is reportedly October 2022 to September 2023, with the OIG report published on September 3, and Coinbase seeks penalties and expedited information gathering under FOIA. The motion presents a procedural dispute, with the court’s decision on penalties and document production as the immediate development to watch.
The resolution of this motion could set important standards for record-keeping and transparency in crypto-related enforcement, influencing how regulators handle internal communications and how companies defend themselves in future cases.
