SEC Chairman Gary Gensler scoffed at holding a gun to his head in response to Rep. Emanuel Cleaver’s reference to “Fiery Saddles” by Rep. Institute titled “Securities and Exchange Commission Oversight” in the Rayburn Building on Tuesday, April 18, 2023.
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SEC Chairman Gary Gensler, who is in the middle of a suppress on crypto companies, was offered as an advisor to Binance’s parent company in 2019, according to lawyers for Binance and founder Changpeng Zhao.
Documents filed by the SEC on Wednesday show lawyers from Gibson Dunn and Latham & Watkins, two of Binance’s law firms, alleging that Gensler offered to serve as an advisor to the crypto exchange. in a number of conversations in March 2019 with Binance and Zhao executives. He eventually met Zhao in Japan for lunch later that month, the filing claims.
At the time, Gensler was teaching at the Massachusetts Institute of Technology’s Sloan School of Management. He was appointed head of the SEC in 2021 by President bidenand in the past year has going down hard on the cryptocurrency industry, suing multiple companies for allegedly selling unregistered securities.
Earlier this week, the SEC filed 13 charges against Binance and Zhao, alleging that the company failed to register as an exchange and broker-dealer, improperly mixed funds, and lacked significant internal controls over its business.
The attorneys said that before Gensler started pursuing Binance, he was trying to get to know the company. The The Wall Street Journal previously reported about Gensler and Binance’s relationship, citing internal messages from Binance and a person close to the SEC chairman. Both suggest that Binance has approached Gensler.
In the latest filing, Gibson and Latham’s lawyers say Zhao continued to stay in touch with Gensler after the meeting in March. And at the request of the future SEC president, Zhao sat down to interview Gensler as part of a crypto course he’s teaching at MIT.
The SEC on Tuesday described Zhao, who is believed to reside in the United Arab Emirates, as a “foreigner” who tends to be “geographically elusive.” Zhao’s lawyers now say that Zhao understands that Gensler is “very comfortable serving as an informal consultant.”
The letter said that by the end of 2019, Gensler was expected to testify before the House Financial Services Committee and that he had sent Zhao a copy of his intended testimony before the hearing.
In July of that year, Gensler testified before the House of Representatives about Facebook’s proposed and subsequent delisting of its planned Libra cryptocurrency and Calibra wallet.
“I do not advise any financial, technology, blockchain or other company, nor do I own any cryptocurrency,” Gensler’s prepared testimony read.
Gensler’s advice to lawmakers at the time was largely the same as his public statements today. He said that, with Facebook envisioning a wallet to store customer assets, rules need to be in place “to protect Calibra’s potential use or abuse of funds.” that customer.”
He has also testified more widely in the same language as his latest statements.
“We must watch out for illegal activities, such as tax evasion, money laundering, terrorist financing, and avoid sanctions,” he said at the time. “We must protect the privacy of individuals.”
Because of Gensler’s relationship with Zhao, Binance’s attorneys said they asked him to deny any action related to the company. They said they received no acknowledgment from SEC staff.
An SEC spokesperson said in a statement to CNBC that, “The Chairman is familiar with and fully complies with his ethical obligations, including any disclaimer obligations.”
The SEC investigations into Binance.US and Binance began in 2020 and 2021, respectively, shortly after Gensler and Zhao’s last alleged contact.
