The Blubber

According to the lawyers representing Binance and its founder Changpeng Zhao, SEC Chair Gary Gensler, who is currently engaged in a strong crackdown on crypto companies, offered to serve as an advisor to Binance's parent company in 2019. Documents filed by the SEC on Wednesday reveal that attorneys from Gibson Dunn and Latham & Watkins, two of Binance's law firms, claim that Gensler had discussions with Binance executives and Zhao in March 2019, where he expressed his willingness to advise the crypto exchange. The filing asserts that Gensler later met Zhao for lunch in Japan that same month.

During this period, Gensler was a professor at the Massachusetts Institute of Technology's Sloan School of Management. He was appointed as the head of the SEC in 2021 by President Biden and has since taken strict actions against the crypto industry, filing lawsuits against multiple companies for allegedly selling unregistered securities.

The SEC recently filed 13 charges against Binance and Zhao, accusing them of failing to register as an exchange and broker-dealer, mishandling funds, and lacking crucial internal controls. The lawyers argue that before Gensler started targeting Binance, he was attempting to establish a close relationship with the company. The Wall Street Journal previously reported on the connection between Gensler and Binance, citing internal messages from Binance and an individual close to Gensler. Both sources indicated that Binance had approached Gensler.

According to the recent filing, the attorneys from Gibson and Latham claim that Zhao maintained contact with Gensler after their March meeting. At Gensler's request, Zhao also participated in an interview with him as part of a cryptocurrency course Gensler was teaching at MIT.

In a separate development, the SEC referred to Zhao as a "foreign national" known for being elusive in terms of his whereabouts. Zhao's legal team now argues that Zhao understood Gensler's involvement to be that of an informal advisor.

Later in 2019, Gensler was scheduled to testify before the House Financial Services Committee, and he sent Zhao a draft of his intended testimony before the hearing.

In July of the same year, Gensler testified before the House regarding Facebook's proposed but later canceled cryptocurrency Libra and its associated Calibra wallet.

In his prepared testimony, Gensler stated, "I do not advise any financial, technology, blockchain, or other companies, nor do I own any cryptocurrencies."

During that time, Gensler's advice to lawmakers mirrored his current public statements. He emphasized the need for regulations to protect customer funds against potential misuse by Calibra, given Facebook's plans to develop a wallet for storing such assets.