In a surprising twist to the ongoing regulatory battle between the Securities and Exchange Commission (SEC) and Binance, lawyers for the crypto exchange have alleged that SEC Chair Gary Gensler offered to serve as an advisor to Binance’s parent company in 2019.
This revelation comes amidst Gensler’s recent crackdown on the crypto industry, raising questions about the motivations behind the watchdog’s actions and the consistency of Gensler’s approach to regulation.
Binance lawyers have made a stunning claim in a recent filing, alleging that SEC Chair Gary Gensler offered to serve as an advisor to the crypto exchange in 2019. This revelation comes as Gensler has been cracking down on the crypto industry, filing charges against Binance earlier this week.
According to documents filed by Binance’s counsels, Gibson Dunn and Latham & Watkins, Gensler engaged in several conversations with Binance executives and founder Changpeng Zhao in March 2019.
The lawyers claim that Gensler eventually met Zhao in Japan for lunch later that month. At the time, Gensler was teaching at the Massachusetts Institute of Technology’s (MIT) Sloan School of Management.
The relationship between Gensler and Binance has been the subject of much scrutiny in the past. The Wall Street Journal previously reported on internal Binance messages and a source close to Gensler, suggesting that the exchange approached the SEC chair.
However, the latest filing indicates that Gensler continued to stay in touch with Zhao even after their initial meeting. Zhao even participated in an interview with Gensler as part of a cryptocurrency course the SEC Chair was teaching at MIT.
Interestingly, in 2019, Gensler sent Zhao a copy of his intended testimony ahead of his appearance before the House Financial Services Committee. During the hearing, Gensler emphasized that he did not advise any financial or technology companies and did not own any cryptocurrencies. His testimony focused on the need for regulations to prevent illicit activities such as tax evasion, money laundering, and terrorist financing.
Binance’s lawyers have requested Gensler’s recusal from any actions related to the company due to his ties to Zhao. However, they claim to have received no acknowledgment from SEC staff regarding this request.
The SEC’s probes into Binance.US and Binance started in 2020 and 2021, respectively, after Gensler’s alleged contact with Zhao. This raises questions about the timing of the agency’s enforcement action and the nature of Gensler’s involvement with Binance.
The allegations made by Binance’s lawyers add an intriguing twist to the ongoing regulatory crackdown on the crypto exchange. It appears that Gensler, who is now spearheading the SEC’s onslaught on the industry, had previously shown interest in advising Binance. This raises questions about the motives behind the SEC’s actions and the consistency of Gensler’s approach to regulating the crypto market.
It remains to be seen how these allegations will impact the legal proceedings and the perception of Gensler’s actions as SEC chair. The crypto industry will undoubtedly be closely watching the developments in this case, as it could have far-reaching implications for the future of cryptocurrency regulation.
Recall that in February, Gensler had put the crypto industry on notice regarding staking and U.S. regulations. The SEC’s enforcement action against Kraken’s crypto staking service and the $30 million settlement with the bitcoin (BTC) trading venue served as a warning to other exchanges like Coinbase offering similar products.