Within twenty-four hours, the Securities Commission Exchange filed two massive lawsuits against the two largest companies in the crypto industry: Binance and Coinbase. The SEC alleged in its lawsuits that both Binance and Coinbase were violating securities laws as they were both unregistered investment companies.
New information, however, came to light from Binance’s lawyers. The information disclosed that SEC Chair Gary Gensler offered to be an advisor to the crypto exchange in 2019. But it seems that his offer was rejected. Thus, it appears that Gensler is using his position as SEC Chair to pursue a personal vendetta against the crypto giant.
Documents filed by the SEC on Wednesday indicate that attorneys from Gibson Dunn and Lathan & Watkins, two of Binance’s law firms, alleging that Gensler offered to serve as an advisor to the crypto exchange in several March 2019 conversations with Binance executives and CZ. Gensler met CZ in Japan for lunch later that month. Then, Gary Gensler was teaching at the Massachusetts Institute of Technology (MIT).
Before Gensler started going after Binance, he was attempting to cozy up to the company. Internal messages were exchanged between CZ and Gensler. Gensler was comfortable becoming an informal advisor for Binance. In the latest filing, the Gibson and Latham attorneys say that CZ continued to stay in touch with Gensler after the March meeting. And at the future SEC chair’s request, CZ sat down for an interview with Gensler as part of a cryptocurrency course he was teaching at MIT.
Since his first year as the head of the SEC, Gensler has been consistent in his stance that most cryptocurrencies fit the definition of securities, crypto exchanges need to register with the SEC and stablecoins are “poker chips” for gambling on crypto, which presents a systemic risk for the economy. He is sticking to these points in his latest remarks.
The disclosure is a sign of how quintessential a figure Gensler has become as the SEC pursues a series of aggressive actions against the crypto world. The SEC chair has made it clear that he wants to force the industry to comply with U.S. securities laws. Because of Gensler’s ties to CZ, Binance’s lawyers said they’d asked for his recusal from any actions regarding the company.
Gensler also called for Congress to take steps towards a clearer regulation framework for crypto exchanges, noting that “right now there’s not a market regulator around these crypto exchanges and thus, there’s really no protection around fraud or manipulation.” Gensler believes that the SEC has jurisdiction over crypto, and is willing to use the political power he is entrusted with to regulate the crypto industry.