Gary Gensler took office in April 2021 as the United States Securities and Exchange Commission chairman. He is a public official who has held various executive positions within the financial industry and the federal government. This article examines Gary Gensler’s background, working history, and his approach to regulating cryptocurrencies as the SEC chair.
KEY TAKEAWAYS
• Gary Gensler, as the SEC Chair, has played a crucial role in shaping crypto regulation.
• Gensler’s tenure has been marked by several high-profile legal battles, including lawsuits against Ripple (XRP) and Binance.
• While Gensler’s proactive approach to increasing oversight in the crypto industry is considered by many to be a commendable and necessary step, it has also attracted criticism among the community.
- Who is Gary Gensler?
- Gary Gensler’s career and employment
- What is Gary Gensler’s salary and net worth?
- What is Gary Gensler’s primary source of income?
- How did Gary Gensler make his money?
- Gary Gensler vs. Bitcoin ETFs
- Gary Gensler vs. XRP
- Gensler and the FTX Fiasco
- Gensler and Binance job application controversy
- Why does Gensler matter in the crypto space?
- The future of Gary Gensler in the SEC
- Frequently asked questions
Who is Gary Gensler?
Gary Gensler was born on October 18, 1957, in Baltimore, Maryland, to Sam Gensler and Jane (née Tilles). Raised as one of five children, Gensler was introduced to finances early through his father’s work as a pinball and cigarette machine vendor.
His father, who also lobbied on industry matters, often took Gary to legislative sessions, sparking his early interest in politics.
Did you know? The crypto community has been actively pushing for Gensler’s removal as SEC Chair, particularly in light of the 2024 U.S. presidential election. Former President Donald Trump has publicly stated that if he is re-elected, one of his first actions will be to fire Gensler.
Education
Gary Gensler graduated from Pikesville High School in 1975, where he received a Distinguished Alumnus Award. He then attended the Wharton School at the University of Pennsylvania, earning a degree in economics summa cum laude in just three years.
Gensler continued at Wharton and completed a master’s in business administration the following year. Notably, he was a coxswain on the university’s rowing team during his undergraduate years. His twin brother, Robert, also attended the University of Pennsylvania.
Family
In 1986, Gary Gensler married Francesca Danieli, a collage artist and filmmaker known for her work, including the film “One Nice Thing” and her politically charged photographic projects. Together, they had three daughters: Lee, Anna, and Isabel. Francesca passed away in 2006 from breast cancer at the age of 52 in a Baltimore hospice.
Achievements
After completing his education, Gary Gensler joined Goldman Sachs, where he quickly advanced to become a partner by the age of 30, making him the youngest partner in the firm’s history. His career at Goldman Sachs involved a significant role in negotiating a $3.6 billion deal with five networks for the NFL’s broadcasting rights, one of the largest media deals at the time.
Gary Gensler’s career and employment
Gary Gensler began his career at Goldman Sachs in 1979, where he spent 18 years, eventually rising to become the co-head of finance. During his tenure at Goldman Sachs, Gensler played a crucial role in the firm’s mergers and acquisitions (M&A) department. His experience in investment banking provided him with deep insights into global financial markets, which would later influence his approach to regulation.
After leaving Goldman Sachs, Gensler transitioned to public service and academia. He served on the board of Strayer University, a for-profit institution, where he contributed his financial expertise to the education sector. His academic career included a significant role at the Massachusetts Institute of Technology (MIT) Sloan School of Management.
As a professor, Gensler taught courses on the Practice of Global Economics and Management, with a particular focus on blockchain technology and cryptocurrencies, a field in which he became deeply involved. He also served as a senior advisor to the MIT Media Lab Digital Currency Initiative. He co-directed MIT’s Fintech@CSAIL, where he contributed to the research on digital currencies and financial technology.
Government service
Gary Gensler’s government career began during the Clinton administration. He took up the position of Assistant Secretary for Financial Markets at the U.S. Treasury Department, advising Treasury Secretary Robert Rubin from 1997 to 1999. In this role, he participated in significant financial policy decisions, including efforts to stabilize financial markets during periods of economic uncertainty.
He was later promoted to Undersecretary for Domestic Finance under Treasury Secretary Lawrence Summers. He worked there from 1999 to 2001. Gensler was a key figure in the fight to exempt credit default swaps from regulation. This was a decision that later garnered criticism in the aftermath of the 2008 financial crisis.
However, his deep involvement in financial policy during this period solidified his reputation as an expert in domestic finance. His contributions to the Treasury Department earned him the Alexander Hamilton Award, the highest honor given by the U.S. Treasury.
Gary Gensler’s service history post-2009
In 2009, Gensler was nominated and appointed the 11th Chairman of the U.S. Commodity Futures Trading Commission (CFTC) under the Obama administration. He developed a reputation as a strict enforcer of left-to-center financial regulations. Gensler worked to transform the $400 trillion swaps market through stringent regulations after the 2008 financial crisis.
He lobbied to support the Dodd-Frank Act and led the CFTC in writing rules that would regulate the swaps market when the Act took effect. He is also known for his investigative efforts in the interbank offered rate (LIBOR) financial scandal. Gensler’s effort as Chair of the CFTC led to financial institutions getting fined hundreds of millions in penalties for manipulating LIBOR and artificially reducing rates.
Gensler left CFTC in 2014. He was awarded the 2014 Tamar Frankel Fiduciary Prize for his reforms in the financial sector. In January 2021, President Biden nominated Gensler as the Chairman of the SEC. The Senate confirmed his five-year term in April 2021.
Gensler at the SEC
In his first year in office, Gensler addressed regulatory concerns on cryptocurrencies and other digital assets. He argues that most cryptocurrencies should fall under the SEC as securities. As the SEC Chairman, Gensler has established a reputation as a no-nonsense regulator, focusing heavily on cryptocurrency regulation.
What is Gary Gensler’s salary and net worth?
As the Chairman of the Securities and Exchange Commission (SEC), Gary Gensler receives an estimated monthly salary of approximately $32,000. This translates to an annual income of around $384,000. This salary is consistent with the typical pay for federal executives at Gensler’s level. However, it is just one component of his overall financial portfolio.
His most recent disclosure estimated his net worth to be between $40 million and $116.2 million, as per Fox News Digital Analysis.
As a former investment banker, Gensler has amassed employment assets and retirement accounts worth between $3.1 million and $12 million. His other assets, mostly investments in exchange-traded funds (ETF), have a value between $36.9 million and $104 million, according to his public financial disclosures.
What is Gary Gensler’s primary source of income?
Gary Gensler’s primary source of income has shifted from his lucrative career in investment banking to his various public service roles. Currently, his income as the SEC Chairperson forms the bulk of his earnings, with a monthly salary of around $32,000.
Gensler’s public service salary is significant. However, it is his past investments and accumulated wealth from his time at Goldman Sachs that contribute a substantial portion of his income.
His net worth has steadily increased since being appointed CFTC Chair in 2009. He also earns considerably from his investments and shares in various companies.
How did Gary Gensler make his money?
Gary Gensler worked for 18 years at Goldman Sachs, one of the largest investment banks in the world. He built an impressive investment portfolio from his experience with the firm. He also served as a professor at MIT.
Gary Gensler vs. Bitcoin ETFs
Since he was appointed SEC Chair, Gensler has engaged in several legal battles with the cryptocurrency community. His strongest stance has been against spot Bitcoin ETFs. The regulator has a history of rejecting spot ETF applications over market manipulation and fraud concerns.
However, in 2022, Grayscale Investments, a crypto asset manager and the parent company behind Grayscale Bitcoin Trust, won a court case against the SEC to overturn the rejection of their spot Bitcoin ETF proposal.
This loss may have been the catalyst for the regulator to greenlight more spot Bitcoin ETF applications. These were finally approved by the SEC in January 2024.
Want the inside scoop on how to take advantage of ETF news and prepare for a Bitcoin ETF? Check our complete guide to help you make the most of ETF approval.
Gensler was also at the center of the drama around the eventual spot ETF approval on Jan. 10, 2024. The first hint of approval came from an SEC tweet on Jan. 8, 2024, that was later claimed to be a hack.
Gensler faced significant backlash for the debacle. Many pointed out that the SEC employing two-factor authentication on its X account should be the bare minimum. This is particularly notable as Gensler is known for making cyber security a core pillar of his agenda at the SEC.
ETF approval then came officially the following day.
Gary Gensler vs. XRP
The Securities Exchange Commission accused Ripple of selling XRP to retail buyers without registering the tokens as securities. The SEC claimed that XRP tokens are securities that fall within the Securities Act of 1933. Thus, it said they satisfy the Howey test. The Howey test is a legal framework in the U.S. that determines if transactions fall under the securities tag or not.
The SEC also accused Ripple executives of market manipulation by promoting XRP tokens to bolster company operations.
Beyond the initial charges, the SEC also accused Ripple executives, including CEO Brad Garlinghouse and co-founder Chris Larsen, of engaging in market manipulation by promoting XRP to support the company’s operations. This alleged manipulation was seen as an effort to increase the token’s market value, thereby benefiting the company and its executives financially.
Surprisingly, Ripple Labs decided to engage in a legal battle with the SEC rather than offer settlements for the lawsuit. Ripple Labs lawyers argued that the organization never received notice from the SEC that XRP can be classified as securities and that the commission was biased in its accusations.
The Ripple case ended partly in favor of Ripple Labs when the preceding judge ruled that the organization did not violate the Securities Act in selling and distributing XRP tokens on public exchanges. However, the ruling also found that Ripple broke Securities laws when it offered XRP to institutional investors.
The current state of the ruling
The Ripple vs. SEC case has reached a conclusion, marking a significant moment for both Ripple Labs and the broader cryptocurrency industry.
The court, under Judge Analisa Torres, ruled that while Ripple’s programmatic sales of XRP do not constitute securities offerings, its direct sales of XRP to institutional investors did violate securities laws.
As a result, Ripple has to pay a $125 million civil penalty, significantly lower than the SEC’s original demand of nearly $2 billion.
Gensler and the FTX Fiasco
In November 2022, FTX, one of the largest crypto exchanges at the time, collapsed when Gensler was cracking down on the crypto industry. Some critics blame Gensler for not having done enough to catch on to the FTX collapse and neglecting to provide regulatory clarity for the industry.
FTX was based in the Bahamas, where there is little regulation and oversight over financial services. The platform’s founder, Sam Bankman-Fried, is the main culprit in the collapse of FTX. His ties with FTX and Alameda Research were the main focus of investigating the platform’s bankruptcy.
Gensler had held meetings with Bankman-Fried eight months before the collapse, discussing the possibility of a new SEC-approved exchange. However, it is unclear how much Gensler looked into Bankman-Fried’s other ventures.
Gensler and Binance job application controversy
The controversy surrounding Gary Gensler and Binance stems from allegations that Gensler, before his tenure as SEC Chairman, had a prior relationship with Binance CEO Changpeng “CZ” Zhao.
This included discussions about potentially advising the company and has raised questions about Gensler’s impartiality in the SEC’s 2023 lawsuit against Binance.
In 2023, the SEC, under Gary Gensler’s leadership, sued Binance and its CEO Changpeng “CZ” Zhao on allegations of offering BNB tokens to the public as unregulated securities.
The SEC also accused Binance of co-mingling customer funds and that Binance.com allowed U.S. citizens to trade on its platform when it was supposed to block U.S. users. The suit also accused CZ of inflating Binance.US trading volumes through other entities he owned.
Binance lawyers asked Gensler to recuse himself from the case, citing prior history between him and CZ. According to the lawyers, in 2019, Gensler met with CZ in Japan and had a conversation with the SEC chair, who offered to serve as an advisor for Binance.
At the time, Gensler was teaching at MIT, and the filing claims that he and CZ maintained contact after the meeting, even holding an interview with CZ as part of his MIT course.
Why does Gensler matter in the crypto space?
Gary Gensler, as SEC Chair, plays a pivotal role in shaping the future of crypto regulation. His policies and statements have significant implications for the entire industry. His firm stance that most cryptocurrencies, apart from Bitcoin, should be classified as securities has sent ripples through the crypto space, affecting market behavior and regulatory expectations.
“I believe that the SEC, working with the CFTC [U.S. Commodity Futures Trading Commission] and others, can stand up more robust oversight and investor protection around the field of crypto finance.”
Gary Gensler testimony before the United States Senate Committee on Banking, Housing, and Urban Affairs: SEC.gov
During his MIT lectures, he extensively discussed blockchain technology’s ability to transform finance. As SEC Chair, he can bridge the gap between traditional finance and cryptocurrency.
Blockchain technology has real potential to transform the world of finance. Though
Gary Gensler: Committee on Agriculture House of Representatives
there are many technical and commercial challenges yet to overcome, I’m an
optimist and want to see this new technology succeed. It could lower costs, risks
and economic rents in the financial system.
However, Gensler’s aggressive approach to enforcing crypto-unfriendly regulations, including lawsuits against major exchanges and classifying most cryptos as securities, has not been popular with the wider community.
The future of Gary Gensler in the SEC
Since his appointment, Gary Gensler has proven to be a proactive SEC Chair. His aim to increase oversight and accountability in the crypto industry is commendable, but his aggressive approach has garnered a lot of criticism from the community.
Gensler’s future at the SEC likely depends on the 2024 U.S. election. While Gensler could still stay on should Trump be elected, Trump may also appoint a new SEC Chair, moving Gensler to the role of Commissioner and thus reducing his influence.
Frequently asked questions
What did Gary Gensler do at Goldman Sachs?
What was Gary Gensler’s previous job?
Who runs the SEC?
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Why was the SEC created?
What does SEC mean?
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