Coinbase has settled its Freedom of Information Act (FOIA) lawsuit against the Securities and Exchange Commission, bringing a years-long legal battle to a close. The dispute centered on a batch of text messages that the agency has acknowledged destroying — records Coinbase sought under a federal statute that gives the public the right to request government documents.

Chief Legal Officer Paul Grewal announced the settlement in a Wall Street Journal op-ed on Wednesday. Under the agreed terms, the SEC will pay $150,000 and commit to repairing its record-retention policies.

The backdrop to the settlement adds significant weight to the outcome. Coinbase initially filed FOIA requests in 2023 seeking records that could shed light on how the SEC determined its approach to treating cryptocurrencies as securities — the same core question at the heart of the enforcement action the agency filed against Coinbase in June of that year. Rather than producing the requested files, the SEC denied the requests, and the dispute proceeded to litigation.

The SEC's own Office of Inspector General — an independent internal watchdog responsible for auditing and investigating the agency — found that nearly a full year of text messages from former Chair Gary Gensler, spanning October 2022 through September 2023, had been wiped after the agency reset his phone before a backup could be created. That period encompassed the collapse of FTX as well as the SEC's most aggressive enforcement push against cryptocurrency exchanges. The watchdog's review found that 38% of the recovered texts pertained to agency business, including a May 2023 exchange regarding the timing of enforcement actions against trading platforms.

"Everybody Should Play by the Same Rules"

Grewal built his case around a stark contrast. Under Gensler's leadership, the SEC had imposed more than $1 billion in fines on financial firms for failing to preserve employee communications, while publicly insisting that "everybody should play by the same rules." Yet the agency lost its own chair's text messages during one of the most consequential periods in cryptocurrency's brief history.

"The Gensler SEC destroyed documents they were required to preserve and produce," Grewal wrote when the inspector general's report surfaced. "We now have proof from the SEC's own Inspector General."

For Coinbase, the significance extended beyond the documents themselves. The company had framed its transparency lawsuits — including a separate challenge against the SEC and FDIC over alleged pressure on crypto's banking access — as evidence that regulators were pressuring the industry without establishing clear rules. The SEC's own enforcement case against Coinbase was ultimately dropped in early 2025 under a new administration and a new chair, part of a broader shift in the agency's posture toward digital assets.

The settlement also serves as a personal closing chapter. Grewal, the lawyer who guided Coinbase through years of legal combat with the SEC, plans to depart the company at the end of July. He concludes this chapter with a modest financial recovery, a commitment from the agency to improve its filing practices, and a narrative the crypto industry is likely to remember: the nation's recordkeeping enforcer could not maintain its own records.

This article is based on reporting by Micah Zimmerman, originally published by Bitcoin Magazine.