The Securities and Exchange Commission (SEC) announced that missing text messages from former Chair Gary Gensler may hinder responses to Freedom of Information Act (FOIA) requests on cryptocurrency enforcement and obscure accountability for decisions made during his tenure.
As reported by The Wall Street Journal, the SEC has increasingly faced challenges over its transparency in cryptocurrency regulation, particularly regarding how it prioritizes enforcement cases and communicates policy shifts. Requests under FOIA have surged, with legal experts noting that documents detailing the SEC’s internal communications can impact litigation and compliance strategies. The loss of potentially responsive messages heightens industry concerns about opacity in federal crypto oversight.
According to the SEC Office of Inspector General's Report No. 587, the deletion of Gensler’s messages could directly impair the agency’s ability to respond fully to FOIA requests involving crypto-related communications. The report noted that FOIA specialists sometimes did not include text messages in search queries unless explicitly directed, creating a blind spot for requestors seeking comprehensive communications records. The Office of Inspector General confirmed that for some closed FOIA cases, no text message searches were conducted despite request language like "all communications," potentially omitting relevant records.
Gensler’s missing messages also highlight systemic gaps in the SEC’s digital records protocols, particularly concerning how Capstone officials' communications are archived. While Capstone officials are supposed to have permanent records retention, the Office of Inspector General found that Gensler’s text messages had not been backed up for nearly a year prior to deletion. The agency only began implementing Capstone-specific mobile backups and training programs after the loss had already occurred.
The U.S. Securities and Exchange Commission (SEC) is responsible for enforcing the nation’s federal securities laws, proposing securities rules, and regulating the securities industry, including exchanges and broker-dealers. It aims to protect investors, maintain fair and efficient markets, and facilitate capital formation. The agency also manages a variety of compliance systems and public disclosure platforms such as EDGAR.
