The Securities and Exchange Commission (SEC) Chair, Gary Gensler, allegedly offered to serve as an advisor to cryptocurrency exchange Binance, according to lawyers representing Binance and its founder, Changpeng Zhao.
This claim introduces a new dimension to the ongoing legal conflict between the SEC and Binance, bringing into focus the relationship between regulatory bodies and the cryptocurrency industry.
The allegations emerged from documents filed by the SEC, in which it was indicated that Gensler, in March 2019, extended an offer to advise the exchange. This was prior to his tenure as SEC Chair, which began in April 2021 following his nomination by President Joe Biden.
However, this narrative contrasts with a prior report by the Wall Street Journal, which suggested that it was Binance who initially approached Gensler for the advisory role in 2018.
As detailed by Binance’s legal team, Zhao and Gensler had a face-to-face meeting in Japan during March 2019. The discussion encompassed the Binance BNB token and the potential establishment of a Binance exchange in the U.S. Given this history, and the possibility of Gensler being a key witness in the case, the lawyers argue that Gensler should recuse himself from the ongoing litigation. As of now, the SEC has not confirmed whether Gensler will be recused from the case.
The SEC initiated legal action against Binance on June 5, alleging that the exchange was operating illegally in the U.S. and failed to register as a securities exchange. In response, Binance issued a statement emphasizing its transparency and denying any wrongful conduct.
Tensions escalated further when Zhao took to Twitter to underscore the SEC’s apparent inconsistent treatment of exchanges. He noted that FTX, another cryptocurrency exchange, has not faced legal action from the SEC despite Gensler previously drawing parallels between the two platforms.
This unfolding situation adds a complex layer to the regulatory scrutiny facing Binance, further stirring debate around the interactions between crypto industry players and financial regulators.