Binance lawyers seek recusal of Gary Gensler

At the time, Gary Gensler had not yet chaired the U.S. Securities and Exchange Commission. Lawyers contend that in March 2019 he offered himself as an adviser to Binance in several discussions with company executives. In the same month he held a private meeting with Binance CEO Changpeng Zhao in Japan, according to the filing.

“Mr. Gensler should have been disqualified from any consideration of this matter [the Binance case] on the basis of this history and the prospect that [he] could be a witness to a material fact,” the exchange’s lawyer said.

In a court filing, it was also said that the head of the Commission should have testified before the House of Representatives’ Financial Services Committee in 2019 about Libra. He allegedly sent Zhao a copy of his speech for consultation.

In testimony before the committee, Gensler stressed that he does not consult for financial, technological, blockchain-related and other companies, and does not own cryptocurrencies.

Until appointment to head the SEC in April 2021, Gensler, in one of the lectures of the MIT educational course Blockchain and Money at the Massachusetts Institute of Technology, stated that most cryptocurrencies are commodities.

Subsequently his position changed. In February 2023 the official hinted at classifying all cryptocurrencies, except Bitcoin, as securities. He also admitted that this status could apply to tokens on the consensus algorithm Proof-of-Stake. The regulator advanced claims on this basis regarding staking services staking Kraken and Coinbase.

Earlier the SEC filed a suit against Ripple, accusing it of selling unregistered securities in the form of the XRP token.

In May, Gensler again warned participants in the crypto industry about the misalignment of existing digital asset markets with the law.

On June 5, the SEC filed a suit against Binance and Zhao. The regulator brought 13 counts, including the sale of unregistered securities.

Subsequently reports emerged that the Commission’s claims were analogous to the allegations brought by the agency against the failed cryptocurrency exchange FTX and its subsidiary Alameda Research.

On June 6 the regulator filed claims in violation of securities laws against Coinbase.