Coinbase has settled its Freedom of Information Act lawsuit against the Securities and Exchange Commission, forcing the agency to pay $150,000 and overhaul its record-retention policies. The case, which began with FOIA requests filed in 2023, sought internal documents on how the SEC decided to treat cryptocurrencies as securities. The settlement comes after an inspector general report revealed that nearly a year of former Chair Gary Gensler's text messages — covering the collapse of FTX and the agency's hardest push against crypto exchanges — were destroyed when his phone was reset before a backup.
The missing texts
The destroyed messages span October 2022 to September 2023. That window includes FTX's implosion in November 2022 and the SEC's aggressive enforcement campaign against crypto platforms. Of the texts that were recovered, 38% touched agency business, including a May 2023 exchange about the timing of enforcement actions against trading platforms. The SEC's inspector general flagged the loss as a serious record-keeping failure.
A $1 billion irony
Under Gensler, the SEC levied over $1 billion in fines on financial firms for failing to preserve employee messages. The agency's own record-keeping, it turns out, wasn't much better. The settlement requires the SEC to fix its retention policies — a concession that the regulator's house wasn't in order while it was policing everyone else's.
Coinbase's win and Grewal's exit
The SEC dropped its enforcement case against Coinbase in early 2025, under a new administration and chair. Now the FOIA fight is over too. Paul Grewal, Coinbase's chief legal officer who led the lawsuit, plans to leave the company at the end of July. His departure marks the end of a chapter for the exchange, which spent years battling the SEC's view that most crypto tokens are securities. The settlement doesn't answer the underlying legal question, but it does force the SEC to clean up its own records — something the agency demanded of Wall Street for years.
