A wave of concern is sweeping through the crypto sector following revelations that a significant period of text messages from former SEC Chair Gary Gensler has been permanently deleted. This incident, brought to light by the SEC's Office of the Inspector General, has ignited fierce criticism regarding transparency and accountability within the regulatory body, especially given the turbulent market events that coincided with the missing communications.
The Curious Case of the Missing Messages
The controversy stems from an SEC-issued smartphone used by Gary Gensler, which inexplicably stopped syncing with the agency’s device management system on July 6, 2023. Despite the device functioning normally, IT staff failed to detect its inactivity for 62 days. A subsequent policy introduced in August 2023, mandating automatic wipes for devices inactive for 45 days, flagged Gensler's phone. In an attempt to restore the device, SEC staff erroneously performed a factory reset, irrevocably deleting text messages spanning from October 18, 2022, to September 6, 2023. The SEC has since admitted that recovery efforts were unsuccessful, confirming the permanent loss of some federal records and acknowledging potential impacts on Freedom of Information Act requests.
Industry Outcry and Calls for Accountability
The crypto industry has reacted with outrage, highlighting that the erased messages cover a profoundly critical period in market history. This timeframe includes major events such as the collapse of FTX, the alleged "Operation Chokepoint 2.0," the liquidation of Silvergate Bank, and the Silicon Valley Bank run. Leaders like Custodia Bank CEO Caitlin Long underscored the timing, while Coinbase Chief Legal Officer Paul Grewal directly accused the SEC of "destruction of evidence relevant to pending litigation," dismissing the incident as far from an "oops" moment. The severity of the situation has even prompted suggestions from figures like Bitcoin investor Wayne Vaughan, who proposed tasking multiple private companies with monitoring and backing up regulators' communications to prevent such lapses in the future. The incident has significantly eroded trust, with calls for greater oversight and more robust data management protocols for regulatory bodies.
