SEC wiped Gensler’s phone… by accident

For years, if you asked anyone in crypto to name their biggest villain, 90% would’ve said the same name: Gary Gensler.

Someone who’s new to crypto reading this:

Before we had today’s SEC (open to innovation, trying to work with crypto companies, yada yada), we had Gary Gensler running the show.

And boy, did he run it differently.

During Gensler’s 4-year tenure, the SEC launched a staggering 125 crypto-related enforcement actions.

Now, this could’ve been good if the SEC was going after actual fraud, like rug pulls and Ponzi schemes.

But no – most of these lawsuits were against legit businesses (exchanges, token creators, and lending platforms), accused of selling unregistered securities under the Howey test.

FYI: that test was created in the 1940s to deal with orange groves 🙃

It’s like using your grandpa’s flip phone manual to fix your iPhone.

So, basically, instead of creating clear rules for crypto companies to follow, Gensler’s SEC used “regulation by enforcement” – they’d sue companies and then use those court cases to set the rules.

This means businesses had no way to know if their token was a security until they got sued.

And the targets weren’t some funky startups, either – we’re talkin’ big dawgs like Binance, Coinbase, and Ripple.

The result? A climate of fear, projects moving overseas, slower trading activity, and institutional investors staying away.

“Uhh… ok? 🤨 Things changed? 🤨 Why are we talking about this? 🤨” – you, maybe.

Well, there are updates to this drama – and they’re spicy 👀

In January 2024, the SEC’s tech team discovered something… interesting: nearly a year’s worth of Gary Gensler’s text messages had been deleted.

We’re talkin’ messages from October 2022 to September 2023 – right when his enforcement campaign was at its most intense.

And we can’t help but speculate whether those missing texts could’ve answered some big questions, like:

Was the SEC’s enforcement fair? Were decisions being made based on politics rather than law? What was really happening behind closed doors?

… I guess we’ll never know.

Now, the spicy part: the reason for this massive data loss is… just wtf.

Apparently, in July 2023, the SEC’s tech office somehow flagged Gensler’s phone as “inactive.” The phone stopped talking to their device management system, but nobody noticed.

Then, in August 2023, they implemented a new policy: any device flagged as inactive gets wiped after 45 days.

In September 2023, this policy kicked in and automatically erased Gensler’s phone.

The cherry on top? The device hadn’t been backed up since October 18, 2022.

This means nearly a year of communications → gone.

Now, the aftermath:

The SEC’s inspector general, Kevin Muhlendorf, released a report on the situaysh and said the mess was “avoidable.”

He pointed to missed alerts, sloppy emergency procedures, lack of proper backups, and poor coordination with vendors.

Basically, a whole lotta incompetence.

The SEC has since made some changes: they’ve disabled texting on most government phones, told the National Archives about the lost records, and agreed to five reforms recommended by the inspector general.

These include better oversight of device wipes, improved record-keeping, verified backups for senior officials, and requiring management approval before any factory resets.

So there you have it. The texts are gone, the questions remain, and the crypto industry moves forward with a new sheriff in town – hopefully one with better IT support.