Former U.S. Securities and Exchange Commission Chair Gary Gensler is facing scrutiny from lawmakers after the agency acknowledged that nearly a year of his text messages were deleted during his tenure.
The SEC’s Office of Inspector General (OIG) said earlier this month that the agency’s technology office “implemented a poorly understood and automated policy that caused an enterprise wipe” of Gensler’s government‑issued mobile device. The wipe erased messages from October 2022 through September 2023.
The timeframe coincides with a period in which the SEC filed high‑profile enforcement actions against crypto firms, including Coinbase and Binance. Coinbase has since asked a federal court to order an “expedited proper search” of the missing communications.
Lawmakers Demand Answers
In a letter to current SEC Chair Paul Atkins, Republican Representatives French Hill, Dan Meuser, Bryan Steil, and Ann Wagner raised concerns about the agency’s handling of electronic records. “Collectively, these incidents, along with the OIG’s findings, raise serious concerns about former Chair Gensler’s and OIT’s compliance with federal recordkeeping laws, transparency obligations, and the integrity of agency oversight,” the lawmakers wrote.
They also cited Gensler’s previous use of a personal email account for official business while leading the Commodity Futures Trading Commission, calling the pattern troubling for an agency tasked with enforcing market rules.
That timeline also coincided with critical industry events, including the collapse of FTX in November 2022.
Implications for SEC Oversight
The episode highlights ongoing questions about recordkeeping and transparency at federal regulators. The SEC has faced pressure from courts, Congress, and industry groups over the scope and manner of its crypto enforcement strategy. The deletion of communications during a key enforcement window could complicate pending litigation and deepen skepticism over the agency’s internal controls.
For lawmakers, the missing texts add to broader concerns about how federal regulators preserve and disclose information. For crypto firms under investigation, the development may bolster claims of procedural shortcomings as they fight SEC lawsuits in court.
Coinbase has long accused the SEC of pursuing “regulation by enforcement” rather than clear rulemaking. Grewal stressed that Coinbase had already requested “all communications” related to crypto enforcement years ago, yet the SEC failed to preserve or produce them. The deleted texts could have included discussions on enforcement priorities during a pivotal moment for the crypto industry.
Legal experts say if a court rules the SEC engaged in spoliation of evidence, penalties could range from sanctions to adverse inference instructions, where juries are told to assume deleted records were unfavorable to the SEC. Such an outcome would strengthen Coinbase’s defense and potentially reshape the ongoing case, which is seen as a landmark for U.S. crypto regulation.