Nearly a Year of Gary Gensler’s Texts Lost in SEC Mishap

An internal investigation has wrapped up into the disappearance of nearly a year’s worth of text messages from Gary Gensler, the former chair of the Securities and Exchange Commission. The report points to poor oversight, faulty IT processes, and missed safeguards as the reasons why important messages tied to crypto enforcement actions vanished.

Good to Know

• Nearly one year of Gensler’s texts from Oct 2022 to Sept 2023 were permanently deleted.
• The SEC’s Inspector General blamed faulty device wipes and poor IT oversight.
• Some missing messages related directly to enforcement against crypto firms.

The SEC’s Office of Inspector General (OIG) said the agency’s IT team applied an automated policy that caused an “enterprise wipe” of Gensler’s government-issued smartphone. The process erased stored texts and operating system logs, leaving no backups.

The situation was made worse by what the OIG described as sloppy change management and unaddressed alerts. Vendor software flaws also played a role, according to the report. Because the team failed to properly capture log data, investigators still don’t know why Gensler’s phone stopped syncing with the SEC’s device management system.

Crypto Enforcement Links

Perhaps most concerning for lawmakers and industry observers, the OIG confirmed that some deleted texts covered SEC enforcement against crypto companies and their founders. That means critical context about how cases were planned and timed may be permanently lost to courts, Congress, and the public.

One recovered exchange from May 2023 involved Gensler, senior staff, and the head of the SEC’s Enforcement Division discussing when to file an action against certain crypto asset trading platforms and their founder. Roughly 1,500 messages were pieced together from colleagues’ records, with 38% of them deemed “mission related” to the agency’s senior decision-making.