The U.S. Securities and Exchange Commission will pay Coinbase $150,000 as part of a settlement tied to deleted text messages from former SEC Chair Gary Gensler's government-issued phone, bringing renewed scrutiny to the agency's recordkeeping practices.

The settlement ends a long-running dispute between Coinbase and the regulator over access to records related to the SEC's oversight of the cryptocurrency industry. Coinbase has used the case to question how the agency handled official communications from its former chair.

Coinbase's records dispute with the SEC

The dispute began after Coinbase filed a Freedom of Information Act request in 2023 seeking records concerning how the SEC was managing cryptocurrency oversight. The agency did not comply with the request, prompting Coinbase to take the SEC to court.

The lawsuit formed part of a broader legal campaign by Coinbase. The exchange also sued the Federal Deposit Insurance Corporation, along with the SEC, arguing that the requested records could reveal what it described as a coordinated effort by regulators to preserve a separation between the cryptocurrency industry and the banking sector.

What happened to Gensler's text messages

According to the SEC's Office of Inspector General, Gensler's government-issued phone stopped syncing with the agency's device management system on July 6, 2023. Although Gensler continued using the phone regularly for 62 days, neither he nor SEC staff noticed that the device had been flagged as inactive.

On August 10, 2023, the SEC's IT office implemented new policies under which devices that failed to connect to the management system for 45 days would be automatically wiped, on the assumption that they were missing or stolen.

Gensler was unaware of the new rule when he later found that SEC applications were missing from his phone. When staff attempted to help restore them, they permanently erased the device, including about a year of messages covering the period from October 18, 2022, to September 2023.

The inspector general described the loss as "avoidable," attributing it to missed alerts, poor coordination with the device vendor, and the absence of a recent backup. Investigators were nevertheless able to recover about 1,500 related text messages from other officials' devices. According to the review, roughly 38% of those conversations were "mission-related," including discussions involving the timing of enforcement actions against crypto trading platforms.

SEC recordkeeping changes under the settlement

As part of the settlement, the SEC agreed to pay Coinbase $150,000. Paul Grewal, Coinbase's chief legal officer, wrote that the agreement also requires the commission to revise its record-retention policies, including eliminating automatic device wiping for senior staff. Those changes align with steps the SEC began taking after the inspector general's report was released in September 2025.

The SEC also disabled text messaging on most government devices, notified the National Archives about the lost records, and committed to five reforms recommended by the watchdog. Those reforms include requiring management approval before any future factory resets.

The dispute has drawn attention because the SEC has fined several Wall Street firms billions of dollars over failures to preserve employee communications, including off-channel messages sent through platforms like WhatsApp. Since 2021, enforcement actions against firms such as JPMorgan Chase, Bank of America, and Morgan Stanley have produced cumulative penalties exceeding $2 billion — while the agency itself failed to maintain messages from its former chair's phone.

Grewal has emphasized that contrast, saying the agency has insisted that "everybody should play by the same rules," while failing to meet the same standard in this case.

The settlement follows other developments in the SEC's litigation posture toward Coinbase. Acting Chair Mark Uyeda dismissed the agency's main case against the exchange in February 2025, and Paul Atkins later took over as the SEC's confirmed chair — part of a broader shift in the agency's approach to cryptocurrency regulation under the new administration, which has signaled greater willingness to engage with the digital asset industry compared to Gensler's tenure.

Grewal, who has led Coinbase's legal efforts in these disputes, is moving into an advisory role at the end of July, marking the end of his tenure in that position.