The US House Republicans have requested that Paul Atkins, the chairman of the Security and Exchange Commission (SEC), investigate the loss of text messages from former SEC Chairman Gary Gensler during his tenure at the agency. The investigation comes after a report from the SEC’s Office of Inspector General (OIG) raised questions about the transparency and integrity of the SEC under Gensler’s leadership from 2021 to 2025.
The report, released in early September, highlighted the deletion of text messages from Gensler’s phone, which has sparked concerns about the agency’s handling of sensitive information. The House Financial Services Committee, led by Chairwoman Hill, has expressed interest in learning more about the OIG’s report and seeking clarity on outstanding questions. “The Committee has participated in the OIG to learn more about her report, to seek clarity about outstanding questions and to discuss additional areas that require further supervision and examination,” Hill stated.
The crypto industry has been critical of Gensler’s leadership, with many accusing him of being instrumental in a plan to restrict banks from providing services to crypto companies. The SEC, under Gensler’s tenure, filed several lawsuits against crypto companies, which has led to allegations that the agency suppressed the industry.
Republicans Accuse Gensler of Double Standards
The letter, signed by Hill, Ann Wagner, Dan Meuser, and Bryan Steil, highlights the double standards applied by Gensler. The SEC, under his leadership, sued several financial companies for “widespread record-keeping failures” and collected over $400 million in fines in 2023 alone. However, the deletion of text messages from Gensler’s phone raises questions about the agency’s own record-keeping practices. “It appears that former Chairman Gensler applied a standard to his own agency that it did not meet,” the Republicans claimed.
SEC IT Department Accused of Deleting Texts
The OIG report found that the SEC’s IT department implemented a poorly understood automated directive that deleted text messages from Gensler’s phone, including those related to SEC enforcement measures against crypto companies. The loss was exacerbated by poor change management, lack of reasonable backup devices, ignored system warnings, and unaddressed manufacturer errors in the vendor software.
Lost Communications on Crypto Enforcement Measures
The OIG discovered that some of the deleted texts included discussions on SEC enforcement measures against crypto companies and their founders. This means that important information about how and when the SEC pursued cases is now unknown. In a separate incident, the SEC experienced a security breach in January 2024 when a hacker compromised its X account to publish false messages about approving Spot Bitcoin (BTC) funds.
The security breach occurred due to the SEC’s failure to activate two-factor authentication. The incident highlights the need for improved security measures and transparency within the agency.
For more information on this story, visit Cointelegraph.
