Binance Puts SEC Chair Gensler In Hot Water, Will It Affect The Lawsuit?

The lawsuits brought by the U.S. Securities and Exchange Commission (SEC) against the exchanges Coinbase and Binance.US continue to be the all-defining topic in the crypto market today. While the market remains in a state of shock, Binance’s lawyers have pulled an ace out of their sleeve that puts SEC Chairman Gary Gensler in hot water.

According to a report from CNBC, Gensler has offered to serve as an advisor to Binance’s parent company in March 2019. This is according to correspondence from the lawyers.

The claim comes as a surprise, not only considering the ongoing lawsuit, but also in light of previous information and Gensler’s crackdown on the crypto industry in recent months. As of March 2019, Gensler was still teaching at the Massachusetts Institute of Technology (MIT) Sloan School of Management. In 2021, he was appointed by U.S. President Biden to chair the SEC.

Before Gensler took action against the crypto exchange, he reportedly tried to befriend the company. Earlier information said the relationship between Gensler and Binance stemmed from the exchange.

Will Gensler’s Past Affiliation To Binance Be An Issue?

Documents filed Wednesday contradict that, claiming that Gensler offered himself to the crypto exchange but was apparently rejected. The claims by Gibson Dunn and Latham & Watkins, two of Binance’s law firms, say Gensler sought an advisory role with the crypto exchange.

Remarkably, Gensler eventually met with CEO Changpeng Zhao for lunch in Japan. Apparently, Gensler even remained in contact with Zhao after the meeting and wanted to win his favor. The lawyers claim that Zhao sat down with the future SEC chairman for a conversation at his request as part of his cryptocurrency course at MIT.

Later in 2019, the filing says, Gensler was scheduled to testify before the House Financial Services Committee. It is alleged that he sent Zhao a copy of his planned testimony before the hearing.

Neither CEO Zhao nor SEC Chairman Gensler have yet publicly commented on the new details. However, they bring a new twist to the ongoing dispute between the exchange and the SEC.

Binance’s lawyers have reportedly asked Gensler to recuse himself from any enforcement action involving the company, but there has been no confirmation from the SEC. An SEC spokesperson only said in a statement to CNBC that “the chairman is very familiar with and fully complies with his ethical obligations, including the debarment obligation.”

Meanwhile, the SEC’s investigations into US arm and Binance began in 2020 and 2021, respectively, long after the last alleged contact between Gensler and Zhao. So it’s unlikely that the previous ties to Binance and CZ will become a stumbling block for Gensler, unless more entanglements come to light.

One of those entanglements could possibly have been Gensler’s assistance to Binance.US in obtaining a license. As Fox Business journalist Eleanor Terrett reports, Gensler already had contact with Binance back in 2018.

Ella Zhang, the head of Binance’s venture investment department at the time, and Harry Zhou met with Mr. Gensler in October 2018, according to the chat. Mr. Zhou wrote: “I note that while Gensler declined to play an advisory role, he generously shared licensing strategies. So one question might be: Did Gensler help Binance.US get licensed in the US?

At press time, the BNB price was at $263.2, close to key support after dropping below the 200-day EMA.