Gensler's Crypto Texts Vanish: Coincidence or Cover-Up?

Key Takeaways

• Over a year of Gary Gensler's text messages are missing, coinciding with major crypto events.
• The missing messages occurred during SEC lawsuits against Binance, Coinbase, and Kraken.
• The SEC's internal watchdog calls the loss of messages 'inadvertent,' but skepticism remains.

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Gary Gensler, former chair of the Securities and Exchange Commission (SEC), is back in the spotlight following a report detailing the disappearance of a significant chunk of his text messages. The SEC's Office of Inspector General (OIG) revealed that messages from Gensler's government-issued iPhone are missing from October 2022 through September 2023 – a period marked by major events in the crypto space.

What's Missing?

This timeframe includes the collapse of FTX, the Grayscale lawsuit concerning a spot Bitcoin ETF, and multiple SEC enforcement actions against major crypto exchanges. The OIG report details how an 'aggressive' auto-wipe rule was implemented for inactive devices, but alerts on Gensler's phone not checking in were not flagged and the device was factory reset.

The OIG report called it an "inadvertent loss" of messages, but this explanation has been met with skepticism.

Reactions

Nate Geraci, president of ETF Store, commented that the loss of text messages during this particular timeframe is suspicious.

Others have pointed out the apparent hypocrisy of the SEC losing data while simultaneously bringing enforcement actions against companies for failing to preserve electronic communications.

Gensler's Crypto Legacy

During his time as SEC chair, Gensler spearheaded a crackdown on the digital asset industry, bringing lawsuits against crypto exchanges and asserting that most tokens are unregistered securities. These actions have now cooled off after his departure.

What Next?

The SEC has taken steps to prevent similar incidents, including disabling texting on most agency devices and notifying the National Archives about the data loss. The SEC also agreed to improve backup procedures, log monitoring, and device wipe protocols.

Since leaving the SEC, Gary Gensler has returned to MIT's Sloan School of Management as a professor.