Binance wants Gary Gensler to recuse himself from SEC lawsuit

Binance's lawyers reiterated in new filings that United States Securities and Exchange Commission chair Gary Gensler should remove himself from the agency's case against him because he once tried to land a job at the under fire exchange. 

The firm raised the concerns in a letter dated June 4, 2023 — that the SEC filed in its supporting documents — claiming it had highlighted them in February. 

“As we conveyed nearly four months ago, Mr. Gensler should have been recused from any consideration in this matter based on this history and the prospect that Mr. Gensler may be a material fact witness,” the exchange’s lawyers wrote.

It's unclear what practical effect that would have on the case though; the SEC has an Enforcement Division of longtime staff that oversee cases like the one filed against Binance, Binance.US, and Zhao. The SEC told the District Court of the District of Columbia in filings this week that its investigation into Binance.US was ongoing as early as late 2020, months before Gensler became chair of the SEC.

"The Chair is very well informed about his ethical obligations and is in compliance, including with the rules governing recusal," an SEC spokesperson said in an email. "The agency takes its ethics rules very seriously, and it’s something that is also very important to the Chair personally."

Binance claimed that Gensler once offered to serve as an advisor to the exchange prior to his government appointment. He also had lunch with Binance CEO Changpeng Zhao in Japan in March 2019 where they discussed BNB, the cryptocurrency associated with the exchange, and the idea of launching a US offshoot of the exchange.

The exchange said that Gensler remained in contact with Zhao, who believed he was an informal advisor to the exchange.

Later, Zhao was interviewed for Gensler’s MIT cryptocurrency course. The exchange added that prior to Gensler’s 2019 appearance in front of the House Financial Services Committee, he sent Zhao an advanced copy of his testimony.

For these reasons, the exchange argued the chairman should recuse himself.

Gensler has previously testified that he does not serve as an advisor to any crypto exchange.

With additional reporting by Colin Wilhelm.