The US Securities and Exchange Commission (SEC) has yielded to legal pressure and agreed to pay $150,000 to Coinbase. The payout settles a Freedom of Information Act (FOIA) lawsuit filed by the crypto exchange. Through this litigation, Coinbase initially sought to compel the market regulator to disclose its internal communications regarding Ethereum. However, the effort uncovered another revelation: dozens of phones belonging to senior SEC officials, including its chair, had been wiped clean of text messages.
Coinbase’s lawsuit began in June 2024 in partnership with research firm History Associates Inc. They were tasked with requesting three sets of public documents to analyze the US regulator’s thinking. The three key areas pursued were the SEC’s investigation into Zachary Coburn, the handling of the Enigma MPC case, and records detailing Ethereum’s transition to a proof-of-stake network.
In response to this fact-finding pressure, the court issued a direct order. The judge instructed the SEC to prioritize gathering documents and communications from SEC Chair Gary Gensler, focusing particularly on discussions surrounding Ethereum’s shift from proof-of-work to proof-of-stake.
Lost While Deciding ETH’s Status
The issue began when the requested data turned out to be gone. In September 2025, the SEC’s Inspector General released a report stating that the agency had deleted Gensler’s text messages. The regulator claimed the deletion was accidental. The missing messages spanned from October 2022 to September 2023 - precisely during the critical period when the SEC was determining whether post-Merge Ethereum should be classified as a security.
The data wipe extended well beyond Gensler’s phone. In total, 21 phones belonging to senior SEC officials were cleared of communication records. Five of those devices belonged to staff members specifically targeted by Coinbase’s document requests. The SEC only alerted the National Archives about the wiped phones in July 2025.
Why Armstrong Brought Up the FDIC
Coinbase CEO Brian Armstrong did not take the agency’s claim of an accident at face value. He responded by comparing the SEC’s actions to those of the FDIC, which was found to have concealed evidence during the 2023 banking crisis. Armstrong argued that Gensler deleting his text history right at the peak of the anti-crypto crackdown was hardly a coincidence.
A Settlement Without Full Transparency
The $150,000 settlement marks the final chapter in a legal battle that spanned over two years. The lawsuit will officially be closed once the SEC completes the production of the remaining public records it agreed to turn over.
Yet for the crypto industry, the settlement leaves unanswered questions. The effort to uncover Gensler’s internal records on Ethereum’s legal status hit a dead end because key evidence was deleted. While the payout resolves the SEC’s administrative obligations in court, what senior officials were thinking during those pivotal moments for Ethereum remains a mystery. Via CoinDesk.
Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
