- Binance’s legal counsel argues that SEC Chair Gary Gensler’s previous offer to serve as an advisor to the exchange calls for his recusal from the current lawsuit.
- Gensler and Binance’s founder, Changpeng “CZ” Zhao, have had historical interactions, including discussions on Binance’s BNB token and the potential of opening a U.S. exchange.
A significant revelation from Binance’s legal team asserts that Gary Gensler, currently chairing the Securities and Exchange Commission (SEC), previously acknowledged the regulatory ambiguity surrounding cryptocurrency. In the face of this uncertainty, Gensler had even offered to act as an advisor to Binance, according to the legal counsel. This historical relationship, they argue, necessitates Gensler’s recusal from the current lawsuit against the exchange.
Back in March 2019, Gensler and Changpeng “CZ” Zhao, Binance’s founder, had a face-to-face meeting in Japan. During this lunch meeting, the two delved into discussions on Binance’s native BNB token and the prospects of launching a Binance exchange in the U.S. Subsequent to this meeting, their communication continued, with Zhao perceiving Gensler as a willing and informal advisor—an idea that Gensler himself had suggested, as outlined in a letter from Binance’s counsel shared by the SEC in a court filing.
Binance’s legal counsel has maintained that Gensler should have been recused from any deliberation on this case, given their historical connection and the possibility of Gensler being a significant factual witness. As of now, the SEC has not clarified whether Gensler has withdrawn himself from the case, or provided any explanation if he has not.
The counsel’s letter further discloses that Gensler had been slated to provide testimony before the House Financial Services Committee in 2019. Prior to this session, he shared a copy of his planned statement with Zhao, seeking his insights.
In contrast to the earlier reports from the Wall Street Journal stating that Gensler was approached by various private firms, including Binance, to serve as an advisor, this new letter suggests that Gensler himself initiated the offer to Binance.
Binance and the SEC will face each other again in court on June 13, regarding the SEC’s application for a temporary restraining order to freeze all assets on Binance.US. Later in the same week, the SEC is court-ordered to respond to a petition from Coinbase concerning why it will or will not initiate rulemaking for cryptocurrency.