SEC Chairman Gary Gensler mocks a gun being put to his head in response to a “Blazing Saddles” reference by Rep. Emanuel Cleaver, D, during a House Financial Services Committee hearing entitled “Overwatch of the SEC,” in a building Rayburn on Tuesday, April 18, 2023.

Tom Williams | CQ-Roll Call, Inc. | Getty Images

SEC chief Gary Gensler, who is in the midst of a crackdown on crypto companies, offered to act as an advisor to Binance’s parent company in 2019, according to Binance lawyer and founder Changpeng Zhao.

Documents filed by the Securities and Exchange Commission (SEC) on Wednesday indicate that attorneys from Gibson Dunn and Latham & Watkins, two of Binance’s law firms, allege that Gensler offered to act as an advisor to the cryptocurrency exchange in several March 2019 conversations with Binance executives. and Zhao. Eventually he met Zhao in Japan for lunch later that month, the recording claims.

At the time, Gensler was teaching at MIT’s Sloan School of Management. He was appointed chairman of the Securities and Exchange Commission in 2021 by President Biden, and over the past year he has taken on the cryptocurrency industry fiercely, suing several companies for allegedly selling unregistered securities.

Earlier this week, the Securities and Exchange Commission (SEC) filed 13 counts against Binance and Zhao, alleging that the company failed to register as an exchange and broker-dealer, improperly mixed funds and lacked crucial internal controls over its business.

Lawyers say that before Gensler began chasing Binance, he was trying to court the company. the Wall Street Journal reported previously On the relationship between Gensler and Binance, citing internal Binance messages and a person close to the SEC chief. Both suggested that Binance approached Gensler.

In the most recent files, Gibson W Latham’s attorneys say Chow continued to maintain contact with Gensler after the March meeting. And at the request of the future SEC chief, Zhao sat down for an interview with Gensler as part of a cryptocurrency course he was taking at MIT.

The Securities and Exchange Commission on Tuesday described Zhao, who is said to reside in the UAE, as a “foreign national” with a tendency to “geographical prevarication.” Zhao’s lawyers now say Zhao realized Gensler was “comfortable serving as an informal consultant.”

Later in 2019, Gensler was scheduled to testify before the House Financial Services Committee, the letter said, and sent Zhao a copy of his testimony before the hearing.

In July of that year, Gensler testified before the House of Representatives regarding Facebook’s proposed cryptocurrency that was later scrapped by Libra and its planned Calibra wallet.

“I do not recommend any financial, technology, blockchain or other companies, nor do I own any cryptocurrency,” a prepared testimony from Gensler is reading.

Gensler’s advice to lawmakers at the time was largely the same as his public pronouncements today. With Facebook envisioning a wallet to store customer assets, he said, rules should be put in place to “protect against Calibra’s use or misuse of such customer funds.”

He also testified on a larger scale, with language similar to his recent statements.

“We must guard against illegal activities such as tax evasion, money laundering, terrorist financing and avoid sanctions,” he said at the time. “We must protect the privacy of individuals.”

Because of Gensler’s ties to Zhao, Binance’s lawyers said they have requested that he recuse himself from any actions related to the company. They say they have not received an acknowledgment from SEC personnel.

A spokesperson for the SEC said in a statement to CNBC that “the president is very aware of his ethical obligations including any to recuse” and is fully committed to them.

SEC investigations into Binance.US and Binance began in 2020 and 2021, respectively, long after Gensler and Zhao allegedly connected.

He watches: The Securities and Exchange Commission is waging war against the cryptocurrency industry

SEC vs. Crypto: Regulators Take on Coinbase and Binance


Leave a Reply

Your email address will not be published. Required fields are marked *