SEC Chair Gary Gensler Offered to Serve as Advisor to Binance in 2019, According to Lawyers Representing the Company

SEC Chair Gary Gensler Offered to Advise Binance in 2019, According to Lawyers

The Allegation

Lawyers for Binance and founder Changpeng Zhao are claiming that Gary Gensler, who is currently leading a crackdown on crypto companies as the SEC Chair, offered to serve as an advisor to Binance’s parent company in 2019. This allegation is based on documents filed by the SEC on Wednesday, which indicate that Gensler had several conversations with Binance executives and Zhao in March 2019, and eventually met Zhao in Japan for lunch later that month.

Gensler’s Background

At the time of the alleged meetings, Gensler was teaching at MIT’s Sloan School of Management. He was appointed head of the SEC in 2021 by President Biden and has since been hard on the crypto industry, suing numerous companies for allegedly selling unregistered securities.

The SEC’s Recent Action against Binance

The SEC filed 13 charges against Binance and Zhao earlier this week, alleging that the company failed to register as an exchange and broker-dealer, improperly commingled funds, and lacked critical internal controls over its businesses.

Gensler’s Relationship with Binance

Before Gensler began going after Binance, the lawyers say he was trying to cozy up to the company. According to The Wall Street Journal, Gensler and Binance had a relationship, and Binance approached Gensler. The lawyers claim that Zhao continued to stay in touch with Gensler after the March meeting, and at Gensler’s request, Zhao sat down for an interview with him as part of a cryptocurrency course he was teaching at MIT.

Gensler’s Testimony in 2019

In 2019, Gensler testified before the House Financial Services Committee over Facebook’s proposed and later canceled cryptocurrency Libra and its planned Calibra wallet. At the time, Gensler’s prepared testimony read, “I do not advise any financial, technology, blockchain, or other companies, nor do I own any cryptocurrencies.” His advice to lawmakers at the time was largely the same as his public statements today, emphasizing the need to guard against illicit activities such as tax evasion, money laundering, terrorist financing, and avoiding sanctions, and to protect individuals’ privacy.

Binance’s Lawyers Request for Recusal

Because of Gensler’s ties to Zhao, Binance’s lawyers asked for his recusal from any actions regarding the company. However, they claim they got no acknowledgement from SEC staff.

Conclusion

The SEC’s probes into Binance.US and Binance began in 2020 and 2021, respectively, well after Gensler and Zhao’s last alleged contact. An SEC spokesperson said in a statement to AsumeTech that “the Chair is very familiar with and full compliance with his ethical obligations, including any recusal obligations.”

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