Its head, Gary Gensler has, in the two years or so since he took on his new role, become the bete noire of crypto organizations and investors. Leading a swathe of lawsuits, he has become one of the Biden-era’s most notable anti-crypto campaigners.
However, it does not seem like the chairman has always been so tough on blockchain-based finance. He once lectured students at one of America’s top business schools about the intersection of the technology and the wider financial world, wrote articles that were broadly supportive of crypto and even, according to legal papers filed by Binance, offered to serve as an advisor for the exchange.
But who is Gary Gensler? How long has he been in charge of the SEC? What did he do before he ran the SEC? Let’s take a look and see what we can find out.
Gary Gensler was born in Baltimore, Maryland, on 18 October 1957. His father, Sam, sold pinball and cigarette machines to bars and his son credits counting the five-cent pieces deposited in the machines when his father took he and his siblings, including his twin brother, Robert, to empty them. At school, he excelled in maths and ended up going to the University of Pennsylvania’s Wharton School to study economics. While he was at university, he served as the cox to the institution’s rowing team.
After he graduated, Gensler entered the world of finance, working for top investment bank Goldman Sachs, working in mergers and acquisitions. He starred in his corporate role and, when he was 30 and married to the artist Francesca Danieli, he was made partner. During his time at Goldman Sachs, he headed the team which helped the National Football League (NFL) to secure a record-breaking TV contract and, by 1997, he was working as the firm’s co-head of finance, responsible for the bank’s treasury and controllers across the globe. It was then that his country came calling.
Unusually for someone caught up in the high-octane, big-money, “Greed is Good” world of 1980s Wall Street finance, Gensler’s political tendencies had always leaned leftwards. A registered Democrat, he was brought into then-President Bill Clinton’s administration in 1997 to serve as Assistant Secretary for Financial Markets in the Treasury Department. Gensler, perhaps inevitably, proved to be a success, helping the Commodities Futures Modernization Act, which exempted over-the-counter securities from regulation, pass in 2000. By then, though, Gensler had already moved on, becoming the country’s Undersecretary for Domestic Finance and, from 1999 until Clinton left office in 2001. As a reward for his work, he was given the Alexander Hamilton award, the highest honor in the US Treasury.
By now, Gensler, who was living in his native state, had got the political bug. Once Clinton’s term expired and he was replaced by the Republican George W. Bush, he served as an advisor to Maryland Senator Paul Sarbanes and helped write the Sarbarnes-Oxley act, which set out rules relating to financial record keeping. In 2003, Gensler became directly involved in party politics, serving as the Maryland Democratic Party’s treasurer for two years.
By now, Gensler was the father of three daughters. Tragedy struck in 2006, however, when his wife died of cancer. Now a widower, Gensler’s talent had been noticed by US Presidential hopeful Hillary Clinton, and he came on board as part of her advisory team. When Barack Obama won the Democratic nomination, he came onboard the Illinois Senator’s campaign and, when Obama became President in 2009, he was one of the first names the new Commander-in-Chief thought of when it came to senior appointments.
In 2009, Gensler was appointed and approved as the new chairman of the Commodities Futures Trading Commission (CFTC). With the world of derivatives taking a lot of the flak for the Great Recession of the late 2000s, he worked to help clean up what he described as the “Wild West” of over-the-counter derivatives trading.
Having called for stronger governmental oversight of the markets, the passing of the Dodd–Frank Wall Street Reform and Consumer Protection Act in 2010, which helped do just that, came as good news for Gensler, who then led the agency through a spurt of rule-making, coming up with 68 new financial guidelines and rules in the time between him taking office and leaving in in 2014, at which point he had already spearheaded a crackdown on the manipulation of the LIBOR interest rate.
After stepping down, Gensler returned to the world of electoral campaigning, serving as Chief Financial Officer for Hillary Clinton’s ill-fated presidential run. In 2017, with Donald Trump in office, he went back to his home state, conveniently close to Washington DC, where he served as Chairman of the Maryland Financial Consumer Protection Commission.
It was around that time that he joined the Sloan School of Management at Massachusetts Institute of Technology (MIT) as Professor of the Practice of Global Economics and Management. Here, perhaps ironically considering his later stance, he taught students about blockchain technology. The course he ran taught those “wishing to explore blockchain technology’s potential use—by entrepreneurs and incumbents—to change the world of money and finance.
Its prospectus added: “The course begins with a review of Bitcoin and an understanding of the commercial, technical, and public policy fundamentals of blockchain technology, distributed ledgers, and smart contracts. The class then continues on to current and potential blockchain applications in the financial sector.”
Gensler was, at that point, seen as being something of a pro-crypto figure in the world of regular, traditional, finance and politics. Something that, perhaps, could be seen as leading people in the world of the blockchain to think that he was on his side came in March 2019 when he, according to legal papers filed by Binance in the wake of the SEC’s June 2023 crackdown, repeatedly offered to serve as an advisor for the exchange, going so far as to allegedly fly to Japan to meet with bosses at the exchange.
The exchange also said that he had had some personal conversations with Binance founder and CEO Changpeng “CZ” Zhao, who he had interviewed as part of his role at the Institute.
We have asked the SEC if we could speak to Gensler about this, but a spokesperson for the agency “respectfully declined” our request.
Gensler had also put pen to paper in support of cryptocurrency, arguing in an article for CoinDesk that Bitcoin (BTC) founder Satoshi Nakamoto had “solved the payments riddle”, that “we already live in an era of digital money” and that “the potential this technology to be a catalyst for change is real”.
He wrote: “Though literally thousands of projects have yet to land on broadly adopted use cases, I remain intrigued by Satoshi’s innovation’s potential to spur change – either directly or indirectly as a catalyst. The potential to lower verification and networking costs is worth pursuing, particularly to lower economic rents and data privacy costs, and promote economic inclusion.”
“Further, shared blockchain applications might help jumpstart multiparty network solutions in fields that historically have been fragmented or resilient to change. Even in this slightly less ambitious form – acting as an innovative irritant to incumbents and traditional technologies – cryptocurrencies and blockchain technology have already prompted real change and can continue to do so.”
By 2021, a Democrat was back in the White House and Joe Biden appointed Gensler as chairman of the SEC. The agency, which was already embroiled in a lawsuit with Ripple Labs over claims that the XRP crypto was an unregistered security, stepped up its anti-crypto stance. Gensler himself had, in 2019, testified before the United States Congress that he was not involved with crypto, saying: “I do not advise any financial, technology, blockchain or other companies, nor do I own any cryptocurrencies.”
Since his appointment, Gensler has been keen to clampdown on crypto, describing it with one of his favorite terms as being a “Wild West” environment. In 2021, he said that crypto should fall under the regulatory oversight of either the SEC or CFTC, while the following year, he announced that he wanted to register and regulate crypto platforms.
In 2023, though, Gensler has, following the bankruptcy of the FTX exchange in November 2022, been on the warpath. While he has, interestingly, been quiet about whether he considers Ethereum (ETH) a security or not and has barely mentioned Bitcoin at all, Gensler and his team have targeted crypto exchanges, naming more than 60 cryptocurrencies as unregistered securities and turning himself into the cryptoverse’s bogeyman. While some American politicians have questioned his effectiveness and even called for his dismissal, right now, it looks like Gary Gensler and his animosity towards large chunks of crypto is not going to go anywhere.
It remains for cryptocurrencies, crypto exchanges and the wider world of the blockchain to work out what they can do to stop his litigation rampage.