Gary Gensler had close ties to Binance’s CZ, offered to serve as exchange advisor: lawyers
SEC chair Gary Gensler offered to serve as an advisor to Binance and kept in contact with CEO Changpeng Zhao, lawyers for the company say.
Lawyers in Binance’s securities case claim that SEC chair Gary Gensler once offered to serve as an advisor to their company, CNBC said on June 7.
Gensler met CZ, offered to act as Binance advisor
The U.S. Securities and Exchange Commission (SEC) sued Binance over alleged securities violations on June 5. Now, CNBC has obtained a filing in which Binance lawyers suggest that Gensler offered to serve as an advisor to Binance’s parent company.
Allegedly, Gensler and Binance executives discussed the prospect extensively in March 2019, and Gensler met Binance CEO Zhao for lunch in Japan later that month.
The two remained in contact after that. Zhao later took part in an interview as part of cryptocurrency courses that Gensler previously taught at MIT. Additionally, when Gensler testified before the House Financial Services Committee in 2019 regarding Facebook’s Libra cryptocurrency, he sent Zhao a copy of his remarks.
Earlier reports from the Wall Street Journal, cited by CNBC, suggested that Binance officials approached Gensler to serve as an advisor as early as 2018.
Is there a conflict of interest?
Gensler’s seemingly extensive ties to Zhao and Binance led Binance’s lawyers to ask for recusal prior to the current case — meaning that Gensler would need to remain uninvolved in any SEC actions against Binance due to a conflict of interest.
However, Binance never received a response when it originally asked for a recusal. Furthermore, the SEC did not begin its probes into Binance reportedly until about 2020 — months after Zhao and Gensler’s supposedly final contact.
The SEC seems to believe that there is no issue. The agency told CNBC that Gensler is “familiar with and [in] full compliance with his ethical obligations” including recusal.
Gensler’s earlier involvement in the crypto industry has previously been noted. His apparent endorsement of Algorand attracted attention in April 2023. Connections between Gensler and FTX associates, though tangential, have also been raised.