Prominent figures in the cryptocurrency world are expressing serious concerns regarding the U.S. Securities and Exchange Commission (SEC). Their concern stems from a revelation by the SEC’s Office of the Inspector General (OIG) regarding the permanent deletion of nearly a year’s worth of text messages from the phone of former Chairman Gary Gensler.
The OIG revealed on September 3rd that the SEC-issued smartphone used by Mr. Gensler stopped synchronizing with the agency’s mobile device management system on July 6, 2023.
Despite appearing to function correctly, the device remained inactive within the system for 62 days. The IT department failed to detect this lack of synchronization during that period.
In August 2023, the SEC Office of Information Technology implemented a policy mandating the automatic wiping of any device that had remained disconnected for 45 days or longer. Consequently, Gensler’s phone was automatically flagged as either lost or stolen.
When SEC personnel attempted to restore the device, they mistakenly performed a factory reset instead. This procedure erased text messages dating from October 18, 2022, to September 6, 2023.
The SEC has since acknowledged that their attempts to recover the lost data were unsuccessful, resulting in the permanent loss of some federal records. Following the incident, the agency disabled text messaging on the majority of staff devices, notified the National Archives in June 2025, and instituted revised backup procedures.
Officials have also admitted that the lost text messages may complicate their ability to fulfill Freedom of Information Act (FOIA) requests.
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Crypto Industry Reacts to Missing Gensler Texts
Reactions from the cryptocurrency industry have been critical, particularly concerning the timeframe of the deleted messages. Industry observers point out that the missing communications occurred during a period of considerable volatility and important events within the crypto markets.
Caitlin Long, CEO of Custodia Bank, observed that this span coincided with events such as the dramatic downfall of FTX, the widely discussed Operation Chokepoint 2.0 initiative, the liquidation of Silvergate Bank, the significant run on Silicon Valley Bank, and federal deposit insurance-related communications that created instability among financial institutions serving the digital asset industry.
Paul Grewal, the Chief Legal Officer at Coinbase, voiced strong criticism, suggesting that the SEC failed to adhere to its own professed standards of transparency. He characterized the deletion as not a mere oversight, but rather as the destruction of evidence directly relevant to ongoing legal actions.
He stated:
“This isn’t a simple mistake. This constituted the destruction of evidence bearing on active lawsuits. The public and the industry deserve better, especially from those in positions of authority who readily criticize and disparage others.”
Wayne Vaughan, a Bitcoin investor, emphasized the seriousness of the matter, and suggested the following:
“Multiple independent firms should be contracted to diligently monitor and securely back up regulatory communications. These companies should also be required to post surety bonds, which would be forfeited if they fail to adhere to the prescribed service benchmarks. Such incidents simply cannot be permitted to continue.”