House Republicans push to probe missing text from former SEC Chair Gary Gensler

US House Republicans have launched an investigation into the disappearance of text messages from former Securities and Exchange Commission (SEC) Chairman Gary Gensler. 

House Financial Services Committee Chairman French Hill, in a letter Tuesday to current SEC Chair Paul Atkins, pointed to an OIG report this September that indicated the Gensler-led SEC may not have operated with “integrity” between 2021 and 2025.

Hill added that the committee is cooperating with the OIG “to understand their report better, to get clarity around unanswered questions, and to identify other areas in need of oversight.”

Lawmakers slam Gensler over double standards

The letter, also signed by Representatives Ann Wagner, Dan Meuser, and Bryan Steil, lambasted Gensler for applying standards to firms his own agency did not live up to. Gensler, for example, fined financial firms more than $400 million in penalties for “widespread record-keeping failures” in 2023, even as the SEC failed to preserve its own communication records due to IT mismanagement.

At the beginning of the month, the Office of Inspector General [OIG], an independent office within the SEC, noted the agency’s tech office “implemented a poorly understood and automated policy that caused an enterprise wipe of Gensler’s government-issued mobile device.”

The office stated that this, in turn, led to the loss of text messages between October 2022 and September 2023. During that period, the SEC raised multiple cases against crypto firms, including Coinbase and Binance. Coinbase recently asked a federal court to compel an “expedited proper search” of Gensler’s deleted texts.

Gensler’s recordkeeping and security lapses fuel SEC credibility concerns

Lawmakers also raised Gensler’s prior use of a personal email for business while he was chairman of the Commodity Futures Trading Commission, the SEC’s sister agency

“Collectively, these incidents, along with the OIG’s findings, raise serious concerns about former Chair Gensler’s and OIT’s [Office of Information Technology] compliance with federal recordkeeping laws, transparency obligations, and the integrity of agency oversight,” they said.

The loss was exacerbated by poor change management, insufficient backup systems, unattended system alerts, and unpatched vendor software flaws, the OIG said.

Deleted messages included discussions of SEC enforcement actions against specific crypto companies, which might have influenced how the regulator decided cases that shaped the industry. Crypto advocates have long accused Gensler of leading a Biden administration campaign to limit U.S. banking access for digital-asset firms and suing the sector aggressively in the process.

The SEC’s credibility has already been called into question in the past following a security breach in January 2024 when hackers took over its official X account and falsely claimed that it had approved spot Bitcoin exchange-traded funds. X said later that the regulator had failed to enable two-factor authentication.

In related developments, the SEC staff has opened up to allowing investment advisers to use state trust firms to custody digital assets. As reported by Cryptopolitan, a rare no-action letter from the SEC’s Division of Investment Management was issued on Tuesday, noting that it wouldn’t suggest the watchdog take disciplinary action if advisers used state trust firms as a crypto custodian.

Law firm Simpson Thacher & Bartlett had sent a letter to the Division on Tuesday, seeking confirmation that registered financial institutions, such as venture capital firms, are free to custody crypto assets and will not face enforcement action by the regulator if they take the move.

This is the second no-action letter from the SEC this week, showing the agency’s hands-off approach to crypto enforcement under the Trump administration. The White House has vowed to ease regulatory oversight of the sector to draw firms and projects to America.

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