Coinbase Wins FOIA Case as SEC Agrees to Pay $150K and Reform Recordkeeping

The U.S. Securities and Exchange Commission (SEC) has agreed to pay Coinbase $150,000 after settling a Freedom of Information Act (FOIA) lawsuit that exposed missing internal records from the agency. The court also forced the SEC to change how it saves official messages after important texts from former SEC Chair Gary Gensler were found missing.

Coinbase Forces SEC Into FOIA Settlement

Coinbase has settled with the SEC after suing the regulator over its refusal to release internal records related to its crypto policies.

Coinbase Chief Legal Officer Paul Grewal confirmed that the SEC will pay $150,000 to settle the lawsuit. More importantly, the agency has agreed to change how it keeps official records after admitting that important communications from former SEC Chairman Gary Gensler and other senior officials were deleted.

The dispute started after Coinbase filed FOIA requests, seeking internal communications that it believed could reveal how federal agencies handled crypto regulation behind closed doors.

When the SEC failed to provide the records, Coinbase took the agency to federal court.

Missing Gary Gensler Messages Created a Big Blunder

During the court proceedings, when a federal judge told the SEC to hand over its internal messages about crypto policies. The SEC said that nearly one year of Gary Gensler’s text messages, covering October 2022 through September 2023, had been wiped out. 

The SEC blamed an automatic system that erased data from government-issued devices.

Later, the SEC’s own Inspector General found that the agency did not include officials’ text messages when answering FOIA requests. 

Coinbase used this finding against the SEC in court. 

Ironically, the SEC had earlier fined many Wall Street companies billions of dollars for not saving employee text messages, but it failed to follow the same rules itself.

What Else is in the Settlement?

The settlement goes beyond the $150,000 payment. The SEC must now update its record retention policies and permanently disable any automatic deletion features on government issued devices used by senior officials.

This comes just a few months after the SEC dropped its lawsuit against Coinbase under the acting SEC Chair Mark Uyeda. 

Coinbase Coinbase   Coinbase is one of the leading cryptocurrency exchanges known for making digital asset trading secure, easy, and accessible for everyone. Founded by Brian Armstrong and Fred Ehrsam in 2012, the company allows users to buy, sell, and trade cryptocurrencies. The publicly traded company provides crypto trading, custody, staking, payments, derivatives, prediction markets, and other digital-asset services for consumers, institutions, businesses, and developers. Coinbase is also expanding beyond a traditional crypto exchange through Base, Coinbase Wallet, Coinbase Advanced, Coinbase One, Coinbase Prime, and stablecoin infrastructure.   Coinbase Details   Attribute Details Key Products Coinbase, Coinbase Wallet, Coinbase One, Advanced Trade, Coinbase Card, Coinbase Prime, Coinbase Commerce, Coinbase Developer Platform, Base Trading Spot trading, Advanced Trade, derivatives, and DEX trading Institutional Services Coinbase Prime, Institutional Solutions, custody, trading, and APIs Developer Services Developer Platform, Wallet SDK, Commerce API, Exchange API, Prime APIs, and Base Node Blockchain Base Stablecoin USD Coin (USDC) Countries 100+ countries Crypto Focus Trading, custody, staking, payments, stablecoins, DeFi, Web3, and onchain infrastructure Notable Blockchain Project Base, Coinbase's Layer-2 blockchain Current Positioning Coinbase is building an “Everything Exchange” covering crypto, equities, derivatives, prediction markets, and more.   Key Features of Coinbase:   Users can buy, sell, exchange, and manage cryptocurrencies such as Bitcoin and Ethereum. Advanced trading tools and features are available for professional and experienced traders. Offers a self-custody crypto wallet, now available through the Base app. Users can earn rewards by staking supported cryptocurrencies on the platform. Coinbase Prime offers institutional services such as trading and crypto custody. APIs and on-chain solutions help developers build and manage crypto applications.   Platform Security and Regulatory Compliance   Platform Security Measures   Cold storage: More than 90 percent of customers’ funds are held offline in secure vaults. Data encryption: User information is encrypted using AES-256. Account protection: MFA and biometrics serve to protect the user’s account. Segregation of assets: Customer crypto funds and fiat balance are segregated and cannot be used without the customer’s consent.   Regulatory Compliance   US Licenses: It is registered with FinCEN and holds licenses for conducting money transfers in many US states, including NYDFS BitLicense. Legal Regulations: Adheres to the USA PATRIOT Act and Bank Secrecy Act through identification and transaction monitoring. Sanctions Screening: Transfers are checked against OFAC lists to help prevent illegal on-chain activity.   Coinbase Products   Product Category Coinbase Crypto Exchange Coinbase Wallet Self-Custody Wallet Coinbase One Subscription Advanced Trade Advanced Trading Coinbase Card Crypto Card Coinbase Prime Institutional Coinbase Commerce Crypto Payments Coinbase Business Business Platform Coinbase Developer Platform (CDP) Developer Platform Base Layer 2 Blockchain Base App Onchain App Coinbase Staking Staking Coinbase Derivatives Derivatives Prediction Markets Prediction Trading Coinbase Ventures Venture Capital   Coinbase Key Supported Regions   North America: United States (all states except Hawaii), Canada Europe: United Kingdom, Germany, France, Spain, Netherlands, Italy, and most EEA member countries Asia-Pacific: Singapore, Australia, India, Turkey, Philippines, Vietnam, Pakistan Africa & South America: South Africa, Brazil, and selected developing markets   support@coinbase.com WalletCentralised Exchange

paul grewal paul grewal at Coinbase paul grewal Chief Legal OfficerDirector