Lawyers in Binance’s securities case allege SEC Chairman Gary Gensler once offered to act as an advisor to their company, CNBC said on June 7.
Gensler met with CZ, offered to act as Binance advisor
The US Securities and Exchange Commission (SEC) sued Binance on June 5 for alleged securities violations. Now CNBC has obtained a filing in which Binance lawyers suggest Gensler has offered to act as an advisor to Binance’s parent company.
Gensler and Binance executives reportedly discussed the prospect at length in March 2019, and later that month, Gensler met with Binance CEO Zhao for lunch in Japan.
The two kept in touch after that. Zhao later participated in an interview as part of cryptocurrency courses Gensler previously taught at MIT. Moreover, when Gensler testified before the House Financial Services Committee about Facebook’s Libra cryptocurrency in 2019, he sent Zhao a copy of his comments.
Earlier reports from the Wall Street Journal, cited by CNBC, suggested that Binance officials approached Gensler as early as 2018 to serve as an advisor.
Is there a conflict of interest?
Gensler’s apparently extensive ties to Zhao and Binance led Binance’s lawyers to seek a challenge ahead of the current case – meaning Gensler should not remain involved in SEC actions against Binance due to a conflict of interest.
However, Binance never received a response when it originally requested a challenge. Furthermore, the SEC reportedly only began its investigations into Binance around 2020 — months after Zhao and Gensler’s supposedly last contact.
The SEC seems to believe there is no problem. The agency told CNBC that Gensler is “familiar with and [in] full compliance with its ethical obligations” including challenge.
Gensler’s past involvement in the crypto industry has been noted before. His apparent endorsement of Algorand drew attention in April 2023. Connections between Gensler and FTX employees, while tangential, have also been raised.
Gary Gensler had close ties to Binance’s CZ and volunteered to serve as an exchange advisor: lawyers first appeared on CryptoSlate.