Binance Requests Gary Gensler’s Recusal from SEC Lawsuit, Citing Prior Relationship

In a recent development, Binance, the popular cryptocurrency exchange, has called for Gary Gensler, the chair of the United States Securities and Exchange Commission (SEC), to recuse himself from the ongoing SEC lawsuit against the exchange. Binance’s lawyers have raised concerns about Gensler’s involvement, highlighting his prior attempt to secure a job at the exchange. They argue that his past interactions and relationship with Binance CEO Changpeng Zhao could make him a material fact witness in the case. The SEC, however, asserts that Gensler is in compliance with ethics rules and takes them seriously.

The exchange’s legal team reiterated their stance in a letter dated June 4, 2023, which was subsequently included in the SEC’s supporting documents. Binance claims that they first brought up these concerns back in February, emphasizing the need for Gensler’s recusal due to his previous interest in joining the exchange. They argue that his involvement in the case may be biased or present a conflict of interest.

The practical effect of Gensler’s potential recusal remains uncertain. The SEC’s Enforcement Division, comprised of long-serving staff, typically oversees cases like the one filed against Binance, Binance.US, and Changpeng Zhao. The SEC disclosed in recent court filings that its investigation into Binance.US was initiated as early as late 2020, well before Gensler assumed the role of SEC chair.

Responding to Binance’s claims, an SEC spokesperson emphasized that Gensler is aware of his ethical obligations and is fully compliant with the rules governing recusal. The agency stresses its commitment to upholding ethics and highlights the personal importance Gensler places on ethical conduct.

Binance asserts that Gensler had previously expressed interest in serving as an advisor to the exchange before his government appointment. Furthermore, in March 2019, Gensler had a lunch meeting with Binance CEO Changpeng Zhao in Japan, during which they discussed BNB, the exchange’s associated cryptocurrency, and the possibility of launching a US offshoot. Binance suggests that Zhao believed Gensler to be an informal advisor to the exchange due to their ongoing contact.

Additionally, Binance revealed that Zhao was interviewed for Gensler’s cryptocurrency course at the Massachusetts Institute of Technology (MIT). The exchange further claims that prior to Gensler’s appearance before the House Financial Services Committee in 2019, he shared an advanced copy of his testimony with Zhao.

Based on these interactions and exchanges, Binance argues that Gensler’s prior relationship with the exchange warrants his recusal from the SEC lawsuit. They contend that his impartiality may be compromised due to the familiarity and discussions he had with Binance’s CEO.

In a fun and interesting fact relevant to this news, it’s worth noting that Binance, founded in 2017, quickly gained popularity as one of the world’s largest cryptocurrency exchanges. Its rapid growth and success can be attributed to its broad range of supported cryptocurrencies, user-friendly interface, and various trading options. Binance’s innovative approach to the crypto space has made it a prominent player in the industry, capturing the attention of both seasoned and novice traders.

While this request for recusal adds a new dimension to the ongoing SEC lawsuit against Binance, the final decision rests with the court. The outcome will undoubtedly have implications for both Binance and the broader cryptocurrency industry, as regulatory oversight and legal proceedings continue to shape the landscape of digital asset trading.

Disclaimer: This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments. This is a news article only. 

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