In a stunning revelation, Binance, one of the world’s largest cryptocurrency exchanges, has disclosed that Securities and Exchange Commission (SEC) Chair Gary Gensler had once offered to be an “informal advisor” to the company. Binance’s legal team claims that this history between Gensler and the exchange’s founder warrants Gensler’s recusal from the ongoing legal proceedings.
Conflicting Reports: Who Approached Whom?
According to a letter submitted by Binance’s counsel to SEC officials on June 4, Gensler had acknowledged the regulatory uncertainties surrounding cryptocurrencies and expressed his willingness to provide guidance and advice to Binance in a previous meeting.
The meeting in question took place in March 2019, when Binance CEO Changpeng “CZ” Zhao and Gensler had an in-person lunch meeting in Japan. Discussions during the meeting reportedly revolved around Binance’s BNB token and the potential establishment of a Binance exchange in the United States.
Questions Surrounding Gensler’s Involvement
The relationship between Gensler and Binance continued beyond their initial meeting, and Zhao understood that Gensler was comfortable serving as an informal advisor, an offer that had originated from Gensler himself. Binance’s legal team argues that based on this history and the potential for Gensler to be a material fact witness, he should have recused himself from the case. They expressed concern that the SEC had not confirmed whether Gensler had indeed recused himself and requested an explanation if he had not done so.
The letter also mentioned that prior to a testimony Gensler was scheduled to provide before the House Financial Services Committee in 2019, he had shared a copy of his planned statement with Zhao for advice. This detail further highlights the extent of their interaction.
Legal Battle Escalates: Binance vs. SEC
While a report by the Wall Street Journal in March 2023 indicated that Binance and other private firms had approached Gensler to serve as an advisor, the recent letter suggests that Gensler himself had pitched the idea to Binance.
In response to the case, Binance’s legal team expressed frustration over the lack of confirmation from the SEC regarding Gensler’s recusal from the case. Notably, the development comes in the wake of the SEC’s lawsuit against Binance, followed by a request for a temporary restraining order to freeze assets on Binance.US Both parties are scheduled to appear in court on June 13 to address this order.
However, in another related development, Coinbase, a prominent cryptocurrency exchange, has filed a petition requiring the SEC to clarify its position on crypto rulemaking. The court has ordered the SEC to respond to this petition by June 14.
The Binance-SEC legal battle and the surprising disclosure of Gensler’s past involvement with Binance have sent shockwaves throughout the cryptocurrency community. As the court hearings approach, the industry eagerly awaits further updates on these significant developments.
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