SEC Probed Over Gensler’s Deleted Texts in Crypto Crackdown

Four Republican committee chairs, led by House Financial Services Committee Chairman French Hill, formally notified current SEC Chair Paul Atkins that Congress is investigating the loss of Gensler’s communications during a critical regulatory period. In a letter sent Tuesday, lawmakers highlighted the irony that the SEC collected over $400 million in fiscal year 2023 alone from firms for recordkeeping violations while failing to preserve its own chair’s communications. “It appears that former Chair Gensler held companies to a standard that his own agency did not meet,” the letter stated, underscoring the regulatory hypocrisy at play.

The investigation follows last month’s Office of the Inspector General report that found IT staff failures and poor policies led to the permanent deletion of messages. According to the report, Gensler’s smartphone stopped syncing with the agency’s device management system on July 6, 2023, though it “otherwise functioned normally and was used regularly.” Despite repeated warnings flagging the device as inactive every two weeks, IT staff took no action for 62 days, allowing the communications gap to widen.

Republicans are now coordinating with the Inspector General to examine whether other senior officials’ communications were similarly lost and whether the agency’s internal controls adequately protect federal records. This marks the second time Gensler has faced scrutiny over recordkeeping practices, following 2013 criticism from the Commodity Futures Trading Commission’s Inspector General for conducting official business through his personal email account.

The timing of the deleted messages proves particularly significant, covering the period when Gensler launched what industry participants describe as an “industry-wide regulatory assault” following FTX’s November 2022 collapse. While former Chair Gensler’s staff claimed he “usually texted for administrative reasons,” the IG review found “multiple instances of substantive, mission-related communications between Gensler, his staff, his fellow Commissioners, and other senior officials.”

During this missing communications period, Gensler publicly declared that the crypto industry’s business model was “built on non-compliance” and stated in a June 2023 CNBC interview that “we don’t need more digital currency” beyond the U.S. dollar. He compared the crypto sector to “the 1920s before federal securities laws were put in place,” calling participants “hucksters, fraudsters, scam artists” running “Ponzi schemes.” These public statements coincided with the agency authorizing over 100 enforcement actions against crypto firms, targeting major exchanges including Coinbase, Kraken, and Binance.

The SEC’s aggressive posture during this period now faces renewed scrutiny given the missing communications that could shed light on the internal decision-making process behind these enforcement actions. The gap in the record raises questions about what substantive discussions occurred outside official channels during the most intensive regulatory crackdown in crypto history.

The document destruction has now reached the federal courts, with Coinbase Chief Legal Officer Paul Grewal announcing that a district court has ordered all parties to appear on October 8 to address the deletion of the texts. “The district court just ordered everyone to appear on October 8 to address the destruction of documents by the Gensler @SECGov as detailed by its own inspector general,” Grewal tweeted on Tuesday, adding that “We appreciate the Court’s attention to this matter.”

Last month, through third-party research firm History Associates, Coinbase requested sanctions against the SEC, calling the agency’s “destroy-and-delay approach to records” cause for “irreparable harm.” This legal maneuver underscores how the recordkeeping failures are now being weaponized by the very companies the SEC targeted during Gensler’s tenure.

The investigation comes as the SEC undergoes a dramatic transformation under the Donald Trump administration. President Trump appointed Paul Atkins, a crypto advocate and former SEC commissioner, to replace Gensler. Atkins was confirmed in April and has already launched “Project Crypto,” a sweeping initiative to relax regulations on digital assets—marking a stark reversal from Gensler’s enforcement-heavy approach. This leadership change adds another layer of significance to the investigation, as the new administration must now account for the recordkeeping failures of its predecessor while implementing its own regulatory vision.