The Securities and Exchange Commission has agreed to pay $150,000 to settle a records lawsuit backed by Coinbase, Bloomberg reports.
The payment covers legal fees rather than a fine, while the agency will also revise its record-retention practices.
- The case centers on texts sent and received by Gary Gensler, the SEC's former chair, between October 2022 and September 2023.
- That period covers much of the agency's crypto crackdown, including its June 6 lawsuit accusing Coinbase of operating an unregistered securities exchange.
Coinbase asked to challenge the SEC's lawsuit on June 28.
Coinbase then backed a July 28 request for internal records about Ethereum, and formally asked a judge to throw out the SEC case on Aug. 4.
On Sept. 6, the SEC's IT system mistakenly treated Gensler's active phone as abandoned and partially wiped it.
- His texts were still recoverable at that point, but technicians then performed a factory reset without first making a backup, permanently deleting nearly 11 months of messages.
The SEC's inspector general blamed a poorly understood automatic-wipe rule, ignored warnings and the failure to back up Gensler's phone.
However, missing system logs meant investigators still couldn't determine why the device stopped connecting or thoroughly assess whether anything malicious had happened.
Roughly 38% involved substantive SEC business, including a May 2023 discussion about when to sue unnamed crypto trading platforms and their founder.
The watchdog concluded that most messages still missing were probably government records too.
There's no evidence, though, that Gensler or the SEC intentionally erased records because Coinbase fought back.
But the settlement also doesn't restore the messages or answer the one part of the story the agency's own investigators couldn't explain: why Gensler's phone suddenly went dark in the first place.