$150,000 and a formal overhaul of its record-retention policies: that is what the SEC agreed to pay Coinbase to settle a Freedom of Information Act lawsuit centered on text messages the agency admits it erased. Chief legal officer Paul Grewal announced the deal in a Wall Street Journal op-ed on Wednesday.
The lawsuit goes back to 2023, when Coinbase filed FOIA requests looking for internal SEC records that might reveal how the agency decided crypto assets qualified as securities. That question sat at the core of the enforcement case the SEC brought against Coinbase that same June. The SEC denied the requests, the dispute landed in court, and then things got awkward for the regulator.
The SEC's own inspector general found that nearly a full year of former Chair Gary Gensler's text messages had been wiped. The deleted window ran from October 2022 to September 2023, covering both the collapse of FTX and the SEC's most aggressive stretch of crypto enforcement. Among the recovered texts, 38% touched official agency business, including a May 2023 conversation about the timing of enforcement actions against trading platforms.
Grewal's argument in court did not require any legal sophistication to land. Under Gensler, the SEC had collected more than $1 billion in fines from financial firms for failing to preserve employee messages, all while insisting that "everybody should play by the same rules." Losing its own chair's texts during the exact period it was rewriting crypto regulation made that position difficult to hold.
For Coinbase the documents were never really the point. The company framed its transparency suits, including a separate challenge over alleged pressure on crypto's banking access, as evidence that regulators shaped industry behavior without publishing clear rules. The SEC's enforcement case against Coinbase itself was dropped in early 2025 after a change in administration and leadership at the agency.
Grewal, who navigated Coinbase through years of regulatory combat, plans to leave the company at the end of July. He wraps up with a settlement check, a government promise to keep better records, and a precedent that will be cited the next time a regulator lectures the industry about document retention.
This article is for informational purposes only and does not constitute financial or legal advice.
