SEC settles Coinbase suit over ‘text messages that disappeared’

The U.S. Securities and Exchange Commission (SEC) has agreed to pay $150,000 in legal fees to settle a lawsuit filed by Coinbase. The lawsuit, which lasted two years, involved Coinbase seeking internal SEC records during a period of heightened regulatory scrutiny of cryptocurrencies under the Biden administration. Coinbase aimed to uncover evidence of what it termed “crypto by enforcement,” referring to the SEC’s aggressive regulatory actions targeting the crypto industry. An internal SEC report from 2025 revealed that nearly a year’s worth of text messages from former SEC Chair Gary Gensler were deleted due to avoidable errors, prompting criticism from Coinbase’s chief legal officer, Paul Grewal.

Paul Grewal highlighted in a Wall Street Journal op-ed that the SEC, the agency responsible for corporate record-keeping, lost numerous texts exchanged between Gensler and other officials during a critical time of the SEC’s anti-crypto campaign. The settlement resolves this lawsuit and includes the SEC paying the legal fee award and modifying its record retention policies to prevent such issues in the future. This settlement coincides with a regulatory shift as the SEC, under the leadership of Paul Atkins appointed during the Trump administration, has adopted a more crypto-friendly stance, including dropping several enforcement actions against crypto firms like Coinbase in 2025.

Separately, Coinbase also reached a settlement with the Federal Deposit Insurance Corporation (FDIC) in February, with the FDIC agreeing to pay $188,440 in legal fees and revising its transparency practices after a court found it violated the Freedom of Information Act. According to Grewal, the litigation efforts successfully uncovered numerous “pause letters,” which he described as clear evidence of a coordinated regulatory effort dubbed OCP 2.0 designed to hinder the crypto industry.

In terms of leadership changes, Paul Grewal is set to transition from his role as Coinbase’s chief legal officer to an advisory position starting July 31. Following his transition, Coinbase’s legal vice presidents Molly Abraham and Ryan VanGrack will assume the roles of general counsel and vice chair, respectively. The developments illustrate ongoing legal and regulatory battles in the crypto space and reflect Coinbase’s continued efforts to hold regulators accountable.