Binance Requests Recusal of SEC Chair Gary Gensler Due to Past Relationship with the Exchange and Its Founder
During a meeting with SEC officials on June 4, lawyers representing Binance highlighted an intriguing aspect of SEC Chair Gary Gensler’s past. They revealed that in a previous capacity, Gensler had acknowledged the challenges of regulatory uncertainty surrounding cryptocurrencies and had offered his services as an advisor to Binance. With Binance currently facing a lawsuit filed by the SEC, the exchange’s legal team argues that Gensler’s prior association and engagement with the company create a potential conflict of interest. As a result, they contend that Gensler should recuse himself from the case to ensure an impartial and fair legal process.
In March 2019, Binance’s legal representatives stated that an in-person lunch meeting took place in Japan between Changpeng “CZ” Zhao, the founder of Binance, and Gary Gensler. During the meeting, the two individuals reportedly discussed various topics, including Binance’s native token, BNB, as well as the potential establishment of a Binance exchange in the United States.
Following their initial meeting, Changpeng “CZ” Zhao and Gary Gensler stayed in contact, and according to a letter shared by the SEC in a court filing, Zhao understood that Gensler was willing to serve as an informal advisor. The correspondence indicates that Gensler himself had extended the offer to provide guidance and support to Binance.
In the letter penned by Binance’s counsel, it was asserted that Mr. Gensler should have been recused from any involvement in the case due to his past history with the exchange and the possibility of being a material fact witness. Binance’s legal team highlighted the lack of confirmation from the SEC regarding Gensler’s recusal and expressed a desire for the Commission to provide an explanation if recusal had not occurred.
According to the letter, it was revealed that in 2019, Gensler had been slated to provide testimony before the House Financial Services Committee. Prior to this hearing, Gensler had shared a draft of his planned statement with Zhao, seeking his input and advice.
In March, the Wall Street Journal published a report stating that “Gensler was approached by multiple private firms, including Binance, to be an adviser.” However, the recent letter from Binance’s lawyers suggests a different narrative, indicating that Gensler himself had pitched the idea to Binance. The legal team expressed concerns over the SEC’s lack of confirmation regarding Gensler’s recusal from the case.
Following the SEC’s lawsuit against Binance, the regulatory agency swiftly filed for a temporary restraining order to freeze all assets held by Binance.US. Both parties are scheduled to appear in court on June 13 to address the matter concerning the restraining order.
Important: This article is intended solely for informational purposes. It should not be considered or relied upon as legal, tax, investment, financial, or any other form of advice.
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