Lost Texts Spur Oversight Inquiry Into Former SEC Chair Gary Gensler

Almost a year of text messages from former Securities and Exchange Commission Chairman Gary Gensler was permanently removed due to an agency error, urging House Republicans to launch a surveillance investigation into the lapse of regulations.

Chairs on four Republican committees, including House Financial Services Committee Chairman French Hill, informed current SEC Chairman Paul Atkins that Congress is investigating the loss of Gensler’s communications between October 2022 and September 2023, extending the agency’s most offensive enforcement in a letter sent Tuesday.

“It appears that former chairman Jensler has bound businesses to standards that his own agency did not meet,” the letter states, saying that the SEC has raised more than $400 million from businesses in fiscal year 2023 alone for record-keeping violations.

Gensler’s smartphone stopped syncing with the agency’s device management system on July 6, 2023, but according to an inspector’s general report released last month, “Otherwise it worked fine and was used regularly.

The lawmaker’s letter did not take action for 62 days, despite warnings that were flagged as active every two weeks that were not flagged as inactive every two weeks.

The House letter argued that former Speaker Gensler’s staff were “usually texted for administrative reasons,” but the IG Review stated that they “found multiple instances of substantial, mission-related communications between Gensler, his staff, his fellow commissioners, and other senior officials.”

“The district court had just ordered everyone to show up on October 8th to deal with the destruction of documents by Gensler @Secgov. Tweet on tuesday. “We appreciate the court’s attention on this matter.”

Gensler’s crackdown on Crypto

The lost communication spans the period when Gensler began industry-wide regulatory assault after the collapse of FTX in November 2022.

Under his leadership, the SEC argued that the crypto industry’s business model was “built on the basis of non-compliance,” and in a June 2023 interview with CNBC, Gensler declared “no digital currency is needed,” above the US dollar.

He compared the crypto sector to the 1920s before the introduction of federal securities laws, calling participants “the con artists who ran the “Hacksters, con artists and the “Ponzi scheme.”

The agency has approved more than 100 enforcement actions against crypto companies during this period, covering major exchanges such as Coinbase, Kraken, and Binance.

Last month, through third-party investigator History Associates, Coinbase called for sanctions against the SEC, calling the agency’s “destructive and delayed approach to records” the cause of “irreparable damage.”

In 2013, Gensler was chairman of the Commodity Futures Trading Commission, but the letter noted that inspectors at the agency criticized him for running official business through his personal email account.

Republicans are now coordinating with inspectors to see if communications from other high-ranking officials have been lost similarly and whether agency internal controls adequately protect federal records.

The SEC was transformed under the Donald Trump administration, and the president appointed code advocate and former SEC committee member Paul Atkins to replace Jensler.

Atkins was confirmed in April and launched Project Crypto, a radical initiative to ease regulations on digital assets.