Sensitive crypto files from Gary Gensler’s regime wiped off from SEC’s records

Nearly a year’s worth of sensitive crypto files from former SEC chief Gary Gensler’s tenure have been wiped off from the agency’s records. The SEC’s Office of Inspector General (OIG) reported that events around major crypto incidents have been lost due to IT errors, that could have been avoidable, the OIG’s report said.

Gensler was the chief of the U.S. SEC during the Presidency of Joe Biden. During his tenure, the crypto market witnessed a number of significant industry instances like the infamous collapse of the FTX exchange and the Grayscale ETF lawsuit. Both, Gensler and Biden were crypto skeptics and discouraged banks from engaging with crypto assets owing to their element of instability.

This week, the OIG released a special review report, elaborating on the “avoidable errors that led to the loss of former SEC chair Gary Gensler’s text messages” from October 2022 to September 2023. The report also highlighted that the SEC took four months to inform the OIG that the blunder had been committed.

The report said that the SEC’s IT department “mistakenly” erased information from Gensler’s government-issued phone. OIG said the phone was reset after it was wrongly considered inactive. This led to the loss of important correspondences as well as phone logs from Gensler’s phone.

“Although the SEC took steps to recover or recreate the deleted text messages, the agency was unable to collect or determine the entire universe, including some federal records,” the OIG said.

A May 2023 conversation involving Gensler and the Director of the Division of Enforcement on initiating an action against crypto trading platforms and their founders now stand deleted, the OIG highlighted in its report.

Similarly, one of Gensler’s conversations around crypto and climate, involving the Office of International Affairs Director and its Deputy Director also stands deleted.

“The investigation also found that the department had not kept important log data, leaving both the agency and its contractors unable to explain why Gensler’s phone stopped connecting to the SEC’s system and triggered the wipe. The absence of backups, weak procedures, and failure to follow record-keeping rules for senior officials made the problem worse and limited the regulator’s response,” the report highlighted.

Following the release of this report, many from the global Web3 sector shared their opinions on the careless actions taken by one of U.S.’s highest ranking government agencies under Gensler’s oversight.

Paul Grewal, the chief legal officer of Coinbase, clapped back at Gensler’s regime after having faced legal challenges under his oversight.

“This isn’t some ‘oops’ moment. This was a destruction of evidence relevant to pending litigation. We all deserve better, especially from ‘leaders’ who see fit to smear others and cast aspersions so freely,” Grewal quipped.

The development was also addressed by Nate Geraci, the president of the NovaDius Wealth Management.

“I’m serious. Think about everything that happened in crypto during this time. Basically FTX collapse thru Grayscale spot btc ETF lawsuit. Makes you think,” Geraci noted.

Following the incident, however, the SEC has disabled texting services on most government issued smartphones and has informed the National Archives on the lost data. Backup systems for these devices have also been upgraded.

In April this year, Gensler was replaced by Paul Atkins as the chairperson of the SEC — a move that was lauded by many from the crypto industry.