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Prominent voices in the crypto sector are questioning the US Securities and Exchange Commission (SEC) after its Office of the Inspector General (OIG) disclosed that nearly a year of text messages from former Chair Gary Gensler had been permanently deleted.
On Sept. 3, the OIG disclosed that Gensler’s SEC-issued smartphone stopped syncing with the agency’s device management system on July 6, 2023.
Despite working normally, the device appeared inactive for the next 62 days, and IT staff failed to detect the issue.
When the Office of Information Technology introduced a policy in August 2023 to automatically wipe devices that had not connected for 45 days, Gensler’s phone was flagged as lost or stolen.
However, when the SEC staff attempted to restore the device, they mistakenly performed a factory reset. That error erased text messages covering Oct. 18, 2022, through Sept. 6, 2023.
The SEC later admitted that its recovery efforts could not fully restore the records, noting that some federal records were permanently lost. Since then, the agency has disabled text messaging across most staff devices, informed the National Archives in June 2025, and introduced new backup measures.
The officials also acknowledged that the loss may affect responses to Freedom of Information Act requests.
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Crypto leaders react
The crypto industry has reacted sharply to this report, noting that the missing messages span a critical period in market history.
Custodia Bank CEO Caitlin Long noted that the missing period coincided with some of the industry’s most turbulent events.
These included the collapse of FTX, the alleged Operation Chokepoint 2.0 campaign, Silvergate Bank’s liquidation, the Silicon Valley Bank run, and federal deposit insurance communications that rattled financial institutions.
Coinbase Chief Legal Officer Paul Grewal criticized the SEC for failing to uphold its own standards of transparency. Grewal argued that the deletion was not an innocent mistake but the destruction of records relevant to ongoing litigation.
He said:
“This isn’t some ‘oops’ moment. This was a destruction of evidence relevant to pending litigation. We all deserve better, especially from ‘leaders’ who see fit to smear others and cast aspersions so freely.”
Considering the severity of the situation, a Bitcoin investor, Wayne Vaughan, suggested that:
“Multiple private companies should be tasked with monitoring and backing up regulators’ communications. Each company should post a fidelity bond, forfeited if they fail to meet the required service standards. This can’t keep happening.”
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