The U.S. Securities and Exchange Commission (SEC) has agreed to pay Coinbase $150,000 after settling a Freedom of Information Act (FOIA) lawsuit that exposed missing internal records from the agency. The court also forced the SEC to change how it saves official messages after important texts from former SEC Chair Gary Gensler were found missing.
Coinbase Forces SEC Into FOIA Settlement
Coinbase has settled with the SEC after suing the regulator over its refusal to release internal records related to its crypto policies.
Coinbase Chief Legal Officer Paul Grewal confirmed that the SEC will pay $150,000 to settle the lawsuit. More importantly, the agency has agreed to change how it keeps official records after admitting that important communications from former SEC Chairman Gary Gensler and other senior officials were deleted.
The dispute started after Coinbase filed FOIA requests, seeking internal communications that it believed could reveal how federal agencies handled crypto regulation behind closed doors.
When the SEC failed to provide the records, Coinbase took the agency to federal court.
Missing Gary Gensler Messages Created a Big Blunder
During the court proceedings, when a federal judge told the SEC to hand over its internal messages about crypto policies. The SEC said that nearly one year of Gary Gensler’s text messages, covering October 2022 through September 2023, had been wiped out.
The SEC blamed an automatic system that erased data from government-issued devices.
Later, the SEC’s own Inspector General found that the agency did not include officials’ text messages when answering FOIA requests.
Coinbase used this finding against the SEC in court.
Ironically, the SEC had earlier fined many Wall Street companies billions of dollars for not saving employee text messages, but it failed to follow the same rules itself.
What Else is in the Settlement?
The settlement goes beyond the $150,000 payment. The SEC must now update its record retention policies and permanently disable any automatic deletion features on government issued devices used by senior officials.
This comes just a few months after the SEC dropped its lawsuit against Coinbase under the acting SEC Chair Mark Uyeda.