SEC targets Binance, is Gary Gensler seeking personal revenge?

After the FTX incident, Gensler is in trouble. On the evening of June 5th, Beijing time, the US Securities and Exchange Commission (SEC) filed a lawsuit against Binance, its CEO Zhao Changpeng (CZ), and two other affiliated subsidiaries, BAM Trading and BAM Management, accusing the defendants of violating US securities trading rules. In the 136-page lawsuit, the SEC listed more than ten “crimes” committed by Binance and CZ. The language was so strong and the accusations were so powerful that they were rare even in the crypto industry, which is accustomed to constant lawsuits. ODaily Star Daily notes: For details of the lawsuit, please refer to “SEC sues Binance and CZ for violating securities laws, speed reading the abstract of the indictment” and “In-depth interpretation: The intent and story behind the SEC’s lawsuit against Binance documents.” It’s worth noting that as the current head of the SEC, Gary Gensler, since taking over as chairman of the agency in April 2021, has abandoned his relatively friendly attitude towards crypto when he was an academic “idle job” (Gensler said in a speech in 2018 that three-quarters of cryptocurrencies are not securities), and has instead launched intensive crackdowns on industry leaders/projects such as Kraken, Block.One, and Telegram, with Binance being the latest target of this series of crackdowns.

However, there have been many questions about the fact that FTX, which has the largest negative impact on the industry and the widest range of affected groups, has never been subjected to a large-scale accusation by the SEC until the incident, and considering Gensler’s close ties to SBF, it is hard not to speculate whether there are undisclosed operations behind it. Coupled with CZ’s role in exacerbating the FTX collapse, Gensler’s attack on Binance is also understood by many onlookers as an attempt to “make a public report of a private feud and settle accounts after the fall.”

Gensler & SBF

Before taking over the SEC, Gensler was a professor at the Massachusetts Institute of Technology (MIT), responsible for teaching content related to global economics and management practices.

This means that Gensler himself has had a professional relationship with SBF’s parents, Joseph Bankman and Barbara Fried, because both Joseph and Barbara are senior professors at the MIT Law School.

If the interdisciplinary relationship seems to be insufficiently close, then the relationship between Gensler and Glenn Ellison is even more worth mentioning. The latter served as CEO of Alameda and is the father of SBF’s “rumored girlfriend” Caroline Ellison.

According to Business Insider, Glenn also worked at MIT and had a direct working relationship with Gensler at the time – Gensler needed to report to Glenn at the time.

In addition, since SBF himself is one of Biden’s largest donors, Gensler, a Democrat, was only able to take over the SEC after Biden took office, which also has a large room for imagination behind it.

The interlaced connections have built a bridge for communication between SBF and Gensler, and until the building collapsed, the two sides seemed to have maintained a relatively good relationship. Evidence supporting this speculation includes: the New York Post reported that Gensler had met with SBF directly several times in the six months before the FTX incident; some venture capital figures have also accused Gensler of being biased towards FTX and treating other exchanges such as Coinbase and Kraken differently.

After the FTX incident, the secretive relationship between Gensler and SBF was also magnified, which also brought Gensler a lot of trouble. Last November, thousands of people petitioned CryptoLaw to investigate Gensler’s behavior in the fraud case; Congressman Tom Emmer also stated that he was investigating whether Gensler had helped SBF evade regulation.

However, as of now, there is no official channel to prove that there is indeed an abnormal relationship between Gensler and SBF, so Gensler can still sit on the top of the SEC chairman’s position for the time being and wield his sword at other institutions in the industry.

Binance & FTX

It has been more than half a year since the FTX collapse, and perhaps many people have forgotten the details of the incident.

Although the fundamental reason why FTX went to the end was asset misappropriation, many people still believe that it was CZ and Binance’s blow that took away FTX’s last straw for survival.

Let’s turn the clock back to November 2022, when there were already some rumors about FTX’s asset status, but perhaps considering FTX’s “bright” development momentum at the time, these rumors did not initially cause enough attention.

Until November 6th, when CZ tweeted that “all FTT positions (about $530 million at the time) will be liquidated”, the FUD surrounding FTX began to quickly escalate.

Subsequently, FTX received massive withdrawal requests, and FTT continued to fall below the “takeover price” publicly announced by Alameda and continued to decline. Under heavy pressure, SBF had to choose to bow to CZ and even announced that FTX would be fully acquired by Binance.

Next is a destined-to-leave-mark operation in Crypto history, and it will always be shrouded in conspiracy theories. Just one day after announcing the acquisition, CZ announced that due to FTX’s suspected mishandling of client funds and being investigated by US regulators, the acquisition plan will no longer be pursued.

Until now, many people have speculated whether CZ’s series of operations were planned in advance, whether the announced acquisition was really intended to take over, or just to obtain a clearer understanding of FTX’s financial details and ensure a “one-hit kill.”

Except for the parties involved, no one may know the truth. The only thing that can be confirmed is that FTX has completely reached its endgame, and this latecomer who once sat on the throne of the second largest exchange has since withdrawn from the historical stage (FTX 2.0 is not yet in sight).

As mentioned earlier, affected by this event, Gensler, who is suspected to have a close relationship with SBF, has also been involved in a lot of trouble, facing a lot of questions from the parliament, industry, and society, which will obviously have a negative impact on its future development.

“Private grievances” aside, interests are the fundamental

Although it seems plausible to think that Gensler has a grudge against CZ and Binance from a gossip perspective, this is ultimately just a joke.

From Gensler’s standpoint, he has never been soft on other industry institutions besides FTX since he took office as SEC, and as the largest centralized entity in the Crypto industry with the highest profits, Binance may have been on Gensler’s “execution list” since day one.

In other words, whether SEC will take action against Binance may not be a question of “will it happen”, but a question of “when will it happen”.

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