In a prior life, now Securities and Exchange Commission Chair Gary Gensler “acknowledged the regulatory uncertainty around cryptocurrency and offered to serve as an advisor” to Binance, lawyers for the exchange told SEC officials on June 4. As Binance faces a suit from the SEC, these lawyers say the history between Gensler and Binance means that Gensler should recuse himself from the case.
In March 2019, Binance’s counsel wrote, Changpeng “CZ” Zhao and Gensler had an in-person lunch meeting in Japan where they discussed the BNB token and Binance opening an exchange in the U.S.
The two remained in touch after the meeting, and “Zhao understood that the now-Chairman was comfortable serving as an informal advisor,” something that Gensler himself offered, said the letter, which was shared by the SEC in a court filing.
“Mr. Gensler should have been recused from any consideration in this matter based on this history and the prospect that Mr. Gensler may be a material fact witness,” Binance’s counsel wrote. “To date, the Staff has never confirmed whether Mr. Gensler has recused himself, and if he has not, the Commission’s explanation for why not.”
The letter indicated that Gensler was scheduled to provide testimony before the House Financial Services Committee in 2019, and prior to this hearing, he forwarded a copy of his planned statement to Zhao for advice.
In March, the Wall Street Journal reported that “Gensler was approached by multiple private firms including Binance to be an adviser” but this new letter makes it appear that Gensler himself pitched Binance on the idea.
Binance lawyers said the SEC has not confirmed if Gensler will be recused from the case.
Shortly after the SEC launched its suit against Binance, it filed for a temporary restraining order to freeze all assets on Binance.US. The two are due back in court on June 13 with regards to the order.
Later that week, on June 14, the SEC has been ordered by a court to respond to a petition from Coinbase with regards to why or why it won’t engage in rulemaking for crypto.