The SEC Office of Inspector General reported serious violations in data preservation. The most significant incident was the disappearance of all messages from Gary Gensler’s phone over a full year. This was the same period when the Commission was actively investigating crypto projects and launching high-profile lawsuits, including the case tied to the collapse of FTX.
Coinbase’s Chief Legal Officer Paul Grewal accused the Commission of violating the Freedom of Information Act (FOIA) by destroying the correspondence. He emphasized that while the SEC imposed multi-billion dollar penalties on companies for data retention failures, it committed the same violations itself.
Coinbase insists on the immediate recovery and disclosure of all texts. To support this, the exchange engaged research firm History Associates, demanding an independent investigation. Coinbase is also seeking sanctions against the SEC for destroying official records.
Rishabh Gupta, head of Web3 Trade Dog Group, said such violations cast doubt on the credibility of the Commission’s actions, particularly since under Gensler the SEC fined crypto firms for recordkeeping failures.
The inspector’s report explained that the loss of data stemmed from a failed implementation of the automatic message deletion policy. Gary Gensler’s device was marked as inactive, backups stopped in October 2022, and a subsequent system reinstallation permanently erased the correspondence.
In addition, the audit identified about 40 other devices at the SEC where data retention and deletion policies were also not properly followed.
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