In a surprising twist, lawyers representing Binance, one of the world’s largest cryptocurrency exchanges, claimed that Gary Gensler, the current chairman of the U.S. Securities and Exchange Commission (SEC), offered to serve as an advisor to Binance in 2019. The allegations have raised concerns about potential conflicts of interest and the regulatory impartiality of the SEC.
Alleged Offer of Advisory Role by SEC Chair Raises Controversy in Binance Case
Binance and its founder Changpeng Zhao’s lawyers have alleged that Gary Gensler, the Chair of the United States Securities and Commission, made an offer to serve as an adviser to the crypto exchange.
Attorneys from Gibson & Dunn and Latham & Watkins, as stated in a CNBC report on June 7, have claimed that documents filed by the SEC on the same day revealed allegations that Gary Gensler offered to serve as an advisor to Binance in March 2019. Contrary to the recent allegations, a prior report from The Wall Street Journal in March stated that it was Binance who initially approached Gensler in 2018 for the adviser role.
Citing messages and documents from 2018 to 2020, The Wall Street Journal reported that Ella Zhang, the former head of Binance’s venture investing arm, and Harry Zhou, co-founder of Koi Trading (a firm in which Binance had invested), met with Gensler in October 2018 to propose an advisory role. However, Gensler ultimately turned down the offer.
Gensler’s Rejection of Advisory Offers and Appointment as SEC Chairman
Furthermore, according to the report, multiple private companies approached Gensler during his tenure at MIT to request his services as an advisor, but he declined all of those offers. Gary Gensler was nominated by United States President Joe Biden to assume the position of SEC Chairman in February 2021 and officially took office on April 17, 2021.
Before assuming his role at the SEC, Gensler held the position of a professor of the practice of global economics and management at the MIT Sloan School of Management. Additionally, he served as the chair of the Maryland Financial Consumer Protection Commission from 2017 to 2019.
On June 5, the SEC filed a lawsuit against Binance, accusing the crypto exchange of operating unlawfully in the United States and failing to register as a securities exchange. The regulatory authority leveled a total of 13 charges against Binance, encompassing allegations of unregistered sales and offers of Binance USD (BUSD) tokens, BNB tokens, and its staking program. As a result of the lawsuit, BNB and BUSD tickers have experienced a decrease, with BNB currently at $261 and BUSD at $1.00.
Binance Asserts Its Distinctiveness Amid Regulatory Scrutiny
Amid increased regulatory actions against Binance, on June 7, the crypto exchange issued a message through its Chinese social media channels, asserting that it possessed unique qualities that set it apart from other cryptocurrency exchanges.
The statement issued by Binance emphasized several key points. Firstly, Binance highlighted the transparency of its wallet addresses, emphasizing that it has never misappropriated users’ funds. Secondly, Binance stated that it has refrained from making substantial political donations or extensive sponsorships in the entertainment and media industry, alluding to practices that were associated with the now-closed cryptocurrency exchange FTX.
Simultaneously, Changpeng Zhao ignited a Twitter debate by highlighting that the SEC did not file a lawsuit against FTX, despite Gary Gensler stating in an interview that there were numerous “parallels” between the two companies.
The allegations that Gary Gensler offered to serve as an advisor to Binance in 2019 have raised concerns about potential conflicts of interest and the impartiality of the SEC. While Binance’s lawyers claim Gensler made the offer, previous reports suggest it was Binance who initially approached him. The controversy surrounding these allegations has underscored the need for greater transparency and accountability in cryptocurrency regulation.
As the legal battles between Binance and the SEC continue, the outcome of these investigations will likely have significant implications for the future of cryptocurrency regulation. Stakeholders are closely monitoring developments to assess the potential impact on the regulatory landscape and the perceived integrity of the SEC’s oversight.