Before becoming head of the US Securities and Exchange Commission, Gary Gensler offered to serve as an adviser for Binance, according the crypto exchange, which is now facing heat from the regulator.
In a letter directed towards the SEC’s division of enforcement, counsel for Binance and the exchanges CEO Changpeng Zhao, said Gensler should have been recused from the agency’s enforcement actions against Binance.
Binance said they conveyed that about four months ago and argued that Gensler could be a “material fact witness.”
“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. We remain deeply troubled by this history and the Staff’s refusal to acknowledge it, which compounds our concern about the course of action threatened by the Staff in this matter,” Binance’s lawyers said.
Background
Gensler was nominated by President Joe Biden to serve as SEC Chair and was sworn into office on April 17, 2021.
Since then, Gensler has taken a strong stance in that crypto exchanges should register with the agency, and has said many cryptocurrencies are securities.
On Monday, the SEC sued Binance and Zhao, also known as CZ, over their “blatant disregard of the federal securities laws.”
Binance and BAM Trading, doing business as Binance.US, under Zhao’s leadership, were unlawfully operating as an exchange, broker-dealer and a clearing agency without registering, the regulator alleged.
The SEC also said Solana, Cardano, Polygon among others were labeled as securities in the complaint.
Gensler had many conversations with Zhao and other Binance staff, and talked about the regulatory uncertainty around crypto while offering to serve as an advisor to Binance, their lawyers said.
“In March 2019, he also met Mr. Zhao for an in-person lunch meeting in Japan, during which they discussed the BNB token, the prospect of BHL establishing a U.S.-based exchange, and other topics,” the lawyers said.
Gensler also sent Zhao his testimony a day before a House Financial Services Committee hearing in 2019, the lawyers said.
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