Key Points:
- SEC Chair Gary Gensler reportedly offered to serve as an advisor to Binance’s parent company in 2019, according to Binance’s lawyers.
- The SEC has recently filed 13 charges against Binance and its founder, Changpeng Zhao, alleging the company failed to register as an exchange and broker-dealer.
In an unexpected twist in the ongoing saga of cryptocurrency regulation, lawyers for Binance and its founder, Changpeng Zhao, have alleged that SEC head, Gary Gensler, the current Chair of the U.S. Securities and Exchange Commission (SEC), offered to serve as an advisor to Binance’s parent company back in 2019. These allegations were made in documents filed by the SEC.
At the time of the alleged offer, Gensler was teaching at the Massachusetts Institute of Technology’s Sloan School of Management. He was later appointed as the head of the SEC in 2021 by President Biden. Since his appointment, Gensler has been known for his stringent approach towards the crypto industry, filing lawsuits against numerous companies for allegedly selling unregistered securities.
Interestingly, before Gensler started his crackdown on Binance, he was reportedly trying to establish a close relationship with the company. This information was revealed by Gibson Dunn and Latham & Watkins, two of Binance’s law firms. They claim that Gensler and Zhao met for lunch in Japan in March 2019, and that Gensler had offered his advisory services to Binance during several conversations with its executives.
The lawyers also allege that Gensler requested an interview with Zhao as part of a cryptocurrency course he was teaching at MIT. They further claim that Gensler sent Zhao a copy of his intended testimony before he was slated to testify before the House Financial Services Committee.
Despite these alleged connections, the SEC has recently filed 13 charges against Binance and Zhao. The charges include allegations of failing to register as an exchange and broker-dealer, improper commingling of funds, and lacking critical internal controls over its businesses.
In response to these charges, Binance’s lawyers have requested Gensler’s recusal from any actions regarding the company due to his previous ties with Zhao. However, the SEC has stated that Gensler is in full compliance with his ethical obligations, including any recusal obligations.
This development adds a new layer to the ongoing narrative of cryptocurrency regulation in the United States. It remains to be seen how these allegations will impact the SEC’s ongoing investigations into Binance and other cryptocurrency companies.
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