Lawyers representing Binance have claimed that SEC Chair Gary Gensler had once offered to serve as an advisor to the exchange´s parent company. This discovery, reported by CNBC on June 7, sheds light on a previously undisclosed connection between Gensler and Binance with its CEO, CZ.
According to the filing obtained by CNBC, it appears that Gensler and Binance executives engaged in extensive discussions about the possibility of him serving as an advisor back in March 2019. The dialogue between Gensler and Binance CEO Changpeng Zhao even culminated in a lunch meeting in Japan.
However, the relationship didn’t end there, as Zhao later participated in an interview as part of cryptocurrency courses taught by Gensler at the Massachusetts Institute of Technology (MIT).
While the recent filing highlights Gensler’s offer in 2019, previous reports from the Wall Street Journal, cited by CNBC, suggest that Binance officials had approached Gensler as early as 2018 to explore the possibility of his involvement as an advisor.
The Conflict of Interest Question
With such apparent ties between Gensler and Binance, the legal team representing the cryptocurrency exchange raised concerns about a conflict of interest. They requested Gensler’s recusal from the SEC actions against Binance, arguing that his previous relationship with the company could compromise his impartiality.
However, Binance never received a response to its initial request for recusal, and the SEC did not initiate investigations into Binance until around 2020, months after the alleged final contact between Gensler and Zhao.
The SEC dismisses the notion of a conflict of interest, as the agency stated to CNBC that Gensler is fully compliant with his ethical obligations, including recusal. The SEC seems not to believe his previous connections with Binance pose any issues in handling the current case.
Gary Gensler’s Prior Crypto Involvement
This is not the first time Gensler’s involvement in the crypto industry has come under scrutiny. His apparent endorsement of Algorand in April 2023 had already attracted attention. Additionally, there have been discussions surrounding Gensler’s connections with FTX associates before the collapse of the exchange in 2021.
In light of the recent filing from Binance’s lawyers, it becomes evident that the relationship between Gensler and Binance goes beyond a mere exploration of advisory roles.
As the chair of the SEC, Gary Gensler has been at the forefront of a regulatory crackdown on the crypto industry. His rigorous approach to crypto regulation is apparently stifling innovation in the sector and is gradually pushing many tech companies offshore.
