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Gary Gensler’s life and times in crypto. CZ upset over internal chat leaks. SEC’s crypto actions up 183% in 6 months. $100M towards COVID-19 research in India. AI v Humans, Authors and Cybercriminals.
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Before he donned his SEC superhero cape, Gary Gensler was a crypto enthusiast who once offered to lend his expertise to Binance.
You heard it right.
Gensler, the current head of the U.S. Securities and Exchange Commission, was ready to advise the crypto giant back in 2019.
Chapter 1: The Allegations 📝
Lawyers representing crypto giant Binance and its founder Changpeng Zhao claimed that United States Securities and Exchange Chair, Gary Gensler, once offered to serve as an adviser to their team.
This bombshell dropped following a CNBC report that revealed documents filed by the SEC on June 7. The allegations state that Gensler made the offer back in March 2019, a time when crypto was still finding its footing in the mainstream.
A previous report from The Wall Street Journal indicated that Binance was the one who approached Gensler first in 2018 for the advisor role.
But, plot twist or not, Gensler declined the offer, and it seems he was quite the popular choice for advisory roles while teaching at MIT, but he declined all the offers.
Chapter 2: The Rise of Gensler 📈
Fast forward to February 2021, and Gensler was nominated by President Joe Biden to chair the SEC. Before his nomination, he had a pretty impressive resume. He was a professor of global economics and management at the MIT Sloan School of Management and served as chair of the Maryland Financial Consumer Protection Commission from 2017 to 2019.
Chapter 3: Binance vs. SEC 🥊
On June 5, the SEC sued Binance for not registering as a securities exchange and allegedly operating illegally in the U.S. Binance didn't take this lightly and sent out a message through its Chinese social media channels declaring that it was "different" from other crypto exchanges.
But, Binance claimed transparency in its wallet addresses and denied syphoning consumers' funds. They also mentioned they never gave "large donations" to political candidates or made "large sponsorships" to entertainment and media entities.
And CZ spoke again
Chapter 4: The Changing Stance of Gensler 🔄
His position on crypto has seen quite a shift. From supporting the technology at MIT to launching a full-swing offensive on the crypto industry, he's had quite the journey.
A little timeline on Gensler's crypto stance:
Before SEC appointment (Pre-2021): Gensler was involved in teaching digital currency courses at MIT and consulting with MIT's Digital Currency Initiative. He was open to the potential of blockchain technology and cryptocurrencies, expressing interest in their potential to spur change and promote economic inclusion. He specifically mentioned the potential for shared blockchain applications to facilitate multiparty network solutions in fields resistant to change.
Nomination Speech (March 2021): During his nomination speech to the U.S. Congress, Gensler praised the transformative role of financial technology and suggested that regulatory rules need to adapt to technological changes. He did not point to crypto specifically but advocated for harnessed financial technology in the service of investors, issuers, and the public.
Early tenure as SEC Chair (2021): In his early tenure as SEC Chair, Gensler asserted that most cryptocurrencies fit the definition of securities and that crypto exchanges need to register with the SEC. He compared stablecoins to "poker chips" for gambling on crypto, which he said presented a systemic risk for the economy. He maintained these positions in subsequent remarks.
Calls for Regulation (2021 - 2022): Gensler called for Congress to create a clearer regulation framework for crypto exchanges and advocated for stronger oversight and investor protection in the field of crypto finance. He argued that the SEC has clear authority over crypto and that there was a need for more definitive rules for crypto.
Post-FTX Collapse (Late 2022): After the collapse of FTX in November 2022, Gensler was criticised for not acting sooner to protect investors. This event seems to have prompted a change in his stance, pushing for stricter regulations and oversight.
Ether as a Security (September 2022): Gensler hinted at the potential designation of Ether as a security, following Ethereum's switch to the proof-of-stake consensus. However, he did not comment on Ethereum specifically at the time.
Public Remarks (Late 2022): Gensler publicly chastised the crypto industry in short videos released on Twitter. He also stated that the crypto industry has had all the clarity it needed regarding regulations, arguing that nothing about crypto markets is incompatible with securities laws.
Congress Testimony (April 2023): In his testimony to Congress, Gensler avoided answering whether he believes Ether is a security. In contrast, the Commodity Futures Trading Commission (CFTC) had previously designated Ether as a commodity.
And now sues major crypto exchanges and calls everything security.
TTD SEC 🔴
So, it turns out that after the infamous collapse of FTX, the SEC, decided to kick things up a notch in the crypto space.
According to an analysis of press releases and news reports, the SEC went from approximately six enforcement actions in the six months before FTX's bankruptcy to a whopping 17 actions in the six months after - an increase of 183%.
This analysis doesn't even account for the recent lawsuits the SEC dropped on Binance and Coinbase.
Some observers couldn't help but notice the sudden burst of regulatory energy. US Representative French Hill called the recent crackdown a "cover your ass" move.
Ripple CEO Brad Garlinghouse couldn't resist chiming in.
TTD Blockquote 🔉
Changpeng Zhao, Binance CEO
"If you don’t like it, leave"
Chat logs between Binance employees have been leaking, thank Gary again.
He warned the employees that everything they say could end up in court or, even better, on the internet!
He has a little something to say to those who might not be satisfied working at Binance.
Some employees, including the former compliance lead "Sam Lim" and the Head of Business Development "Alvin," were having secretive discussions. They were talking about "dumping" BNB tokens before they tanked and even admitted to running an unlicensed securities exchange.
Lim even spilled the beans about a way to onboard clients on the Binance US platform but still let them trade on Binance.com's international exchange through a "special arrangement."
CZ came to the rescue with his own take on the situation. He brushed off the chat logs as a mere "complaint" from two people, but he did admit that it caused quite a bit of damage to our precious company's reputation. CZ assured everyone that he doesn't pry into employee conversations. In fact, this was the first time he laid eyes on those logs. He called the SEC's use of them as a poster "ridiculous."
TTD AI 📍
AI vs. Humans
The brilliant minds at the University of Kansas have cracked the code to spot those sneaky AI-generated academic papers with incredible precision. Armed with 64 perspectives from fellow Homo sapiens and 128 articles spewed out by our chatty buddy ChatGPT, they went head-to-head in a wordy battle. Turns out, AI has a soft spot for words like "others" and "researchers" while avoiding the likes of "however," "but," and "although." The result? Boom! The model nailed it with a 100% accuracy rate, sniffing out those AI imposters with ease. It even sniffed out paragraphs written by AI within human articles with a whopping 92% accuracy.
AI vs. Authors
AI vs. Cybercriminals
Elliptic, the clever crypto analytics firm, has decided to invite a new member to its team: artificial intelligence! They've teamed up with OpenAI's ChatGPT chatbot to turbocharge their blockchain tracking and risk detection toolkit. With ChatGPT's lightning-fast data organization skills, Elliptic can now tackle mountains of information in record time.
TTD Numbers 🔢
Ethereum co-founder Vitalik Buterin and Polygon co-founder Sandeep Nailwal, in collaboration with India-based crypto fund Crypto Relief, are working together to allocate $100 Million for COVID-19 research and medical infrastructure development in India.
Crypto Relief will provide $90 Million in USD Coin (USDC), while Buterin will contribute $10 Million from his own funds.
The funds will be distributed to address the COVID-19 pandemic and its long-term effects, with a focus on improving medical equipment and studying Long COVID. The donation will be stored in a Gnosis Safe wallet.
This initiative follows Buterin's previous philanthropic efforts, including a $5 million donation to aid Ukraine's defense against Russia's invasion. As of November 2021, Crypto Relief had raised $473 Million.
TTD Surfer 🏄
Lens Protocol raises $15 Million to expand decentralised social media that allows users to own their online presence.
HyperPlay, a platform (or launcher) for accessing Web3-native games, has raised a $12 Million Series A funding round.
Senators Elizabeth Warren and Chris Van Hollen have sent a letter to US Attorney General Merrick Garland to ask that the Department of Justice (DOJ) investigate Binance for allegedly lying to lawmakers.
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