The SEC’s internal watchdog has concluded that nearly a year’s worth of Gary Gensler’s text messages were permanently lost due to “avoidable errors” by the agency’s IT department, erasing records that included discussions tied to crypto enforcement.
According to the Office of Inspector General (OIG), Gensler’s government-issued phone underwent an “enterprise wipe” between October 2022 and September 2023, the same period when the SEC was most active in its crackdown on crypto firms. The wipe deleted all stored texts and operating system logs. The OIG faulted poor change management, lack of backups, ignored system alerts, and unresolved vendor software flaws.
Some of the lost records were critical. Investigators recovered about 1,500 messages from colleagues and other sources and found that roughly 38% were “mission-related.” Among them was a May 2023 exchange between Gensler, his staff, and the Enforcement Division director about the timing of actions against specific crypto trading platforms and their founder.
The revelations come with sharp irony. While Gensler’s own messages vanished, the SEC simultaneously fined banks and investment firms for failing to properly preserve communications under the 1934 Securities and Exchange Act. At the time, Gensler himself declared, “Finance, ultimately, depends on trust.”
The SEC has since disabled text messaging on most agency devices, informed the National Archives of the loss, and introduced new training and backup practices for senior officials. But the OIG warned the missing texts could hinder the agency’s ability to respond to Freedom of Information Act requests.
Crypto industry figures quickly seized on the news. Custodia Bank founder Caitlin Long mocked the explanation, calling it a mysterious “boating accident,” while ETF analyst Nate Geraci noted that the missing texts covered a period spanning from FTX’s collapse to the Grayscale Bitcoin ETF lawsuit.
Gensler, who left the SEC in January, is remembered in the crypto space for urging firms to “come in and register” even as enforcement actions against the industry hit a decade-high in 2023.
