The US Securities and Exchange Commission (SEC) is under fire after a recent report detailed a series of “avoidable” mistakes from the watchdog’s IT department that resulted in the loss of records linked to crypto enforcement actions during Gary Gensler’s tenure.
According to the September 3 report, the OIT implemented a “poorly understood and automated policy” in August 2023 that caused “an enterprise wipe of Gensler’s government-issued mobile device.”
Seemingly, Gensler’s government-issued device was erroneously flagged as inactive and had not been backed up for nearly a year. OIT “hastily performed a factory reset,” which deleted text messages stored on the device and the device’s operating system logs between October 18, 2022, and September 6, 2023.
The incident was worsened after a series of “additional OIT actions, deficiencies, and missed opportunities, including a lack of backups and procedures that failed to consider record retention requirements for Capstone officials (such as Gensler),” the report explained.
Among the recovered messages, the SEC retrieved a May 2023 conversation involving Gensler, his staff, and the Director of the Division of Enforcement about when the SEC would file an action against certain crypto asset trading platforms and their founders.
The CLO affirmed that “this isn’t some ‘oops’ moment. This was a destruction of evidence relevant to pending litigation.” The IOG report noted that the loss of the former chairman’s text messages may impact the SEC’s response to certain Freedom of Information Act (FOIA) requests.
Additionally, it inquired about the number of employees and third-party contractors who worked on these investigations and enforcement actions, and “know more about the previous SEC’s infamous ‘Crypto Assets and Cyber Unit’ within the Enforcement Division.”
“We all deserve better, especially from ‘leaders’ who see fit to smear others and cast aspersions so freely,” Grewal concluded.
