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Gensler Tried to Be A Binance Advisor Before Suing Them

Plus, is all of this just setting TradFi up to take over crypto?

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Nathaniel Whittemore
June 08, 2023

The Breakdown First Five - Wednesday June 7, 2023

Welcome back to The Breakdown First Five — the 5 most interesting and/or important stories in bitcoin, crypto, and markets to start your day.

5. Pooltogether Free and Clear

The Pooltogether lawsuit has been dismissed. In 2021 a former Elizabeth Warren staffer launched the clearly ideological lawsuit on the back of a $10 dollar deposit. After years of pretrial jostling, the Judge in the case has ruled that the lawsuit had no place being in Federal Court and no harm was caused by the DeFi protocol simply existing. DeFi clarity will have to wait for a less nonsensical case.

4. Yellen “very supportive” of SEC

Gensler isn’t the only one on a press tour. Treasury Secretary Yellen appeared on CNBC yesterday to back up the SEC’s campaign, saying their actions were “certainly appropriate.” Although supportive of enforcement, even Yellen had to admit there were holes in the regulations and said she would like to “work with Congress to see additional legislation passed.” We might not like the kind of legislation Yellen has in mind.

3. Tradfi takeover

The CEO of Soros’ family office had some interesting comments about the future of the Crypto industry yesterday, claiming that Crypto native firms could have benefited from an “adult in the room”. But don’t worry, the big tradfi institutions are here to clean up the mess, already poised to “take the lead”. While she thinks “Crypto is here to stay”, existing Crypto firms might not be if they keep mishandling customer funds.

2. $12B Transferred Offshore

SEC says that $12B in customer funds found their way out of BinanceUS accounts for safekeeping offshore in recent years. According to private audit reports, US funds were not custodied onshore, mostly being transferred to CZ’s prop trading firm Merit Peak. The parallels to FTX are obvious, but is this just the SEC fighting a PR war? There are no clear allegations of missing funds, just improper transfers.

1. Gensler The Adviser

Binance lawyers claim that Gary Gensler pursued a role as an advisor to the exchange. Previous reporting made it seem as if Binance were looking to curry favor with the soon-to-be regulator in 2019, but new claims flip the narrative. The accusations are piling up as Binance is due in Court on Tuesday to fight an order to freeze US assets.

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Thanks for reading -NLW