Binance lawyers claim SEC Chair Gensler offered to serve as an advisor to the crypto company in 2019
United States Securities and Commission Chair Gary Gensler once offered to serve as an adviser to Binance, lawyers representing the crypto exchange and its founder Chi have alleged.
By Anna B Kiwanuka
Gary Gensler, the current head of the U.S. Securities and Exchange Commission (SEC), has been taking a tough stance on the crypto industry since his appointment by President Biden in 2021. Gensler, who previously taught at the Massachusetts Institute of Technology’s Sloan School of Management, has filed lawsuits against several companies in the crypto space for allegedly selling unregistered securities.
Recently, the SEC filed 13 charges against Binance, one of the world’s largest cryptocurrency exchanges, and its CEO, Changpeng Zhao (CZ). The charges allege that Binance failed to register as an exchange and broker-dealer, commingled funds improperly, and lacked adequate internal controls.
Interestingly, prior to Gensler’s crackdown on Binance, there were attempts to establish a relationship between the SEC chair and the exchange, according to lawyers familiar with the matter. The Wall Street Journal reported on internal Binance messages and sources close to Gensler, suggesting that Binance had approached Gensler.
The latest court filing by lawyers from Gibson and Latham reveals that CZ maintained contact with Gensler even after their initial meeting in March. In fact, at Gensler’s request, CZ participated in an interview for a cryptocurrency course taught by Gensler at MIT.
The SEC, in its recent description of CZ, referred to him as a foreign national known for being elusive in terms of his whereabouts. However, CZ’s lawyers argue that CZ believed Gensler was serving as an informal advisor.
The lawyers also claim that in 2019, Gensler shared a copy of his intended testimony with CZ ahead of his appearance before the House Financial Services Committee. During that testimony, Gensler denied providing advice to any financial or technology companies and stated that he did not own any cryptocurrencies.
Gensler’s advice to lawmakers during the hearing aligned with his current public statements. He emphasized the need for regulations to prevent illicit activities such as tax evasion, money laundering, terrorist financing, and the evasion of sanctions, while also highlighting the importance of protecting individuals’ privacy.
Due to Gensler’s previous association with CZ, Binance’s legal team requested his recusal from any actions related to the company. However, they claim to have received no acknowledgment from SEC staff regarding their request. In response to these concerns, an SEC spokesperson assured that Gensler is fully compliant with his ethical obligations, including any recusal requirements.
It is worth noting that the SEC’s investigations into Binance.US and Binance began in 2020 and 2021, respectively, well after the alleged last contact between Gensler and CZ.