The U.S. Securities and Exchange Commission, an agency that has fined Wall Street firms billions for failing to preserve employee texts, lost nearly 11 months of its own former chair’s messages, and has now agreed to pay Coinbase $150,000 to settle the fallout.

The settlement ends a two-year legal battle that began when Coinbase requested internal SEC communications about how the regulator handled crypto policy under former Chair Gary Gensler.

But the real story is not the money. It is what the litigation uncovered: the SEC—the same agency that has fined Wall Street firms billions of dollars for failing to preserve employee communications had lost nearly 11 months’ worth of text messages from its own former chair. The missing messages spanned October 18, 2022, through September 2023, a period during which the SEC pursued more than 100 crypto-related enforcement actions.

An SEC Office of Inspector General report described the loss as “avoidable,” attributing it to a factory reset of Gensler’s government-issued iPhone before a usable backup had been completed. The report also found that although the SEC had announced plans to disable texting on agency devices in October 2022, implementation was delayed, leaving Gensler’s device vulnerable when it was reset.

The settlement is the latest in a series of legal victories for Coinbase against the SEC, following the dismissal of the regulator’s landmark enforcement case against the exchange in February 2025. It also reflects the broader shift in U.S. crypto policy under the Trump administration, as the SEC has withdrawn several enforcement actions and begun developing rules aimed at integrating digital assets into mainstream finance.

The settlement can be summed up in four words:

“The rules apply equally.”

Or, as Coinbase Chief Legal Officer Paul Grewal put it, “The SEC insisted everybody should play by the same rules”—before making the very mistake it warned others against.The request: What Coinbase wanted

The dispute began in 2023 when Coinbase submitted FOIA requests seeking internal SEC communications related to crypto regulation. Specifically, the company requested records concerning:

• The SEC’s views on Ether (ETH)
• Information relating to other crypto investigations
• Communications involving senior officials, including Gary Gensler
• Internal discussions surrounding crypto enforcement decisions

After the SEC failed to produce the requested records, Coinbase sued both the SEC and the Federal Deposit Insurance Corporation (FDIC) in 2024. The exchange argued that U.S. financial regulators had coordinated efforts to “stamp out crypto companies” and alleged that the SEC failed to adequately search officials’ email accounts or establish a sufficient process for locating responsive records.

The lawsuit formed part of Coinbase’s broader transparency campaign. In February 2026, the company secured a separate FOIA settlement with the FDIC, leading to the release of documents related to the agency’s so-called “pause letters,” which asked banks to suspend or limit crypto-related activities between March 2022 and May 2023.

The lost texts: What the SEC failed to preserve

The litigation uncovered a significant record-keeping failure. During one of the busiest periods of the SEC’s crypto enforcement campaign, text messages exchanged between Gary Gensler and other senior officials were permanently lost.

The missing records covered October 18, 2022, through September 2023, when the SEC was investigating Coinbase, filing numerous crypto enforcement actions, and shaping its regulatory approach toward digital assets.

According to the SEC Office of Inspector General, the loss resulted from a series of preventable mistakes.

The Inspector General concluded that a timely backup and stronger record-retention procedures would have prevented the loss. The report also noted that the SEC encountered difficulties recovering messages from the government-issued phones of five additional senior officials.

The irony was difficult to ignore. For years, the SEC had imposed billions of dollars in penalties on Wall Street firms for failing to preserve employee communications. Yet it failed to preserve its own chair’s official text messages.

Grewal underscored the contradiction in his Wall Street Journal op-ed, arguing that the agency insisted “everybody should play by the same rules” before falling short of its own standard.

The broader context: A string of Coinbase victories

The FOIA settlement represents the latest chapter in Coinbase’s legal battles with U.S. financial regulators.

The settlements also reflect a broader shift in U.S. crypto regulation. Under President Donald Trump, the SEC has withdrawn several enforcement actions against digital asset companies and begun drafting rules intended to integrate cryptocurrencies more fully into the financial system.

Paul Atkins has since been confirmed as SEC Chair, succeeding acting Chair Mark Uyeda. Coinbase has also backed federal crypto legislation, including the stablecoin framework approved by Congress, while continuing to advocate for the advancement of the CLARITY Act.

Meanwhile, Grewal is expected to transition into an advisory role at the end of July 2026, bringing to a close a legal campaign that challenged many of the SEC’s enforcement tactics during the Gensler era.

What this teaches us

The case offers several important lessons about government accountability and crypto regulation.

Regulators are not above the rules

The SEC spent years penalizing financial firms for poor record-keeping before experiencing a similar failure itself. The episode demonstrates that accountability standards should apply equally to regulators.

FOIA remains a powerful accountability tool

Coinbase used the Freedom of Information Act to expose weaknesses in the SEC’s record-retention practices, illustrating how transparency laws can hold even powerful government agencies to account.

Better record-keeping strengthens public trust

As part of the settlement, the SEC agreed to review its record-retention policies, disable automatic deletion on senior officials’ devices, and strengthen procedures surrounding official communications. These reforms are intended to improve transparency and reduce the risk of similar failures.

U.S. crypto regulation is entering a new phase

Taken together with the dismissal of the SEC’s enforcement case against Coinbase and recent legislative developments, the settlement reflects a broader shift away from the enforcement-heavy approach that characterized much of the Gensler era.

Conclusion: Accountability in the age of crypto

The lost texts case is ultimately a story about accountability.

The SEC—an agency that extracted billions of dollars in penalties from financial firms for record-keeping failures failed to preserve its own official communications. Coinbase used the legal system to expose that lapse, ultimately securing both financial compensation and commitments to strengthen the agency’s record-retention practices.

While the $150,000 settlement is relatively modest, its broader significance lies in the precedent it sets. It reinforces the principle that government agencies must be held to the same standards they enforce against others.

As Grewal of the Wall Street Journal argued, the case comes down to four simple words:

“The rules apply equally.”