SEC to Pay Coinbase $150,000 to Settle Lawsuit Over Deleted Gary Gensler Text Messages

The U.S. Securities and Exchange Commission has agreed to pay $150,000 in legal fees to resolve a two-year-old lawsuit filed by cryptocurrency exchange Coinbase. The settlement concludes a legal battle over the federal regulator’s record-keeping practices during its aggressive oversight of the digital asset market under the Biden administration.

The lawsuit, initiated by Coinbase under the Freedom of Information Act, sought to uncover internal communications that the exchange argued would expose a coordinated “regulation by enforcement” campaign against the crypto industry. The litigation took a dramatic turn following an internal investigation in 2025, which revealed that the SEC had deleted nearly a year’s worth of text messages belonging to former SEC Chair Gary Gensler due to what were described as “avoidable” administrative errors.

Writing in the Wall Street Journal, Coinbase Chief Legal Officer Paul Grewal criticized the agency’s failure to maintain its own records while simultaneously policing the record-keeping of private financial firms. Grewal noted that the SEC has since updated its data retention protocols to prevent similar losses of official communications.

This settlement is part of a broader shift in the federal government’s approach to digital assets following the transition to the Trump administration. Under the leadership of newly appointed SEC Chair Paul Atkins, the regulator has adopted a more collaborative stance toward the industry, dropping several prominent enforcement actions, including those targeting Coinbase.

The SEC agreement marks the second major legal settlement Coinbase has secured against federal regulators this year. In February, the Federal Deposit Insurance Corporation (FDIC) agreed to pay Coinbase $188,440 in legal fees to settle a separate FOIA lawsuit. That case revealed the existence of “pause letters” sent by regulators to financial institutions, which Coinbase argued represented an under-the-table effort to restrict banking access for cryptocurrency companies.

The conclusion of these high-profile legal battles coincides with a transition in Coinbase’s legal leadership. Paul Grewal, who has led the company’s legal strategy since 2020, will step down from his role as chief legal officer on July 31 to become an advisor. Molly Abraham, currently a legal vice president at the firm, will assume the role of general counsel, while fellow vice president Ryan VanGrack will step into the role of vice chair.