Coinbase claims SEC destroyed Gary Gensler’s correspondence

Key points:

• Coinbase claims that the SEC deleted Gary Gensler’s text messages from October 2022 to September 2023.
• The data loss coincided with the collapse of FTX and the SEC’s crackdown on the crypto industry.
• The exchange is demanding expedited disclosure of information and punishment of the regulator.

Coinbase has accused the US Securities and Exchange Commission (SEC) of destroying correspondence from the agency’s former chairman, Gary Gensler. According to the exchange, messages from October 2022 to September 2023, when the SEC was most actively tightening control over the crypto market, have been lost.

Source: x.com

Coinbase’s chief legal officer, Paul Grewal, said the company has evidence from the SEC’s inspector general. “The Gensler SEC destroyed documents they were required to preserve and produce,” he wrote on social media, attaching court documents.

Source: x.com

How the SEC lost its correspondence

The SEC Inspector General’s report states that the messages were deleted due to the agency’s internal policy: data is automatically deleted from devices that have been disconnected from the network for more than 45 days. The loss affected not only Gensler’s correspondence but also more than 40 employees, including 21 devices with confirmed or suspected deletion of information.

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Coinbase’s demands

Coinbase has filed a motion with the US District Court for the District of Columbia. The exchange insists on the disclosure of the remaining data and sanctions against the SEC. Lawyers emphasize that the destruction of correspondence has caused “irreparable harm” that cannot be remedied.

Source: x.com

Consequences for the SEC and the crypto market

Lawyers point out that the SEC’s actions undermine confidence in its work. “The SEC has fined private firms billions for poor record keeping, but now stands accused of doing the very same thing itself,” said Rishabh Gupta, director at Trade Dog Group.

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The deletion of the posts coincided with the collapse of the FTX exchange and a series of SEC lawsuits against crypto companies.

According to experts, if the court accepts Coinbase’s claims, it will set a precedent: companies will be able to challenge not only the SEC’s arguments, but also the reliability of its evidence. This could slow down future cases, forcing the agency to defend its internal practices.