In a document that was filed in the US Securities and Exchange Commission (SEC) lawsuit against cryptocurrency exchange Binance, Paradigm accused the regulator of “circumventing the regulatory process.”
“Paradigm has filed an amicus brief in the SEC lawsuit against Binance. Paradigm was not an investor in Binance and has no direct financial interest in the outcome of the process. However, we believe it is critical to oppose government excesses, regardless of who the defendant is,” he said.
The crypto venture capital firm highlighted in its note released on September 29 that “the SEC is attempting to leverage the disturbing allegations it makes in its complaint to change the law, while bypassing the regulatory process. The SEC is clearly acting outside the scope of its authority and we oppose this move.”
In its statement, Paradigm highlighted a speech by the SEC president during a testimony on the regulation of secondary markets.
“Chairman Gary Gensler himself acknowledged in congressional testimony that the SEC did not have the authority to regulate these same secondary markets, noting in clear words that “the exchanges that trade these crypto assets do not have a regulatory framework.” As our paper highlights, the SEC’s theory in this case would alter what we know about securities law in several critical ways.
It is worth remembering that the USDC stablecoin issuer, Circle, disagreed with the classification of stablecoins as securities when intervening in the US Securities and Exchange Commission (SEC) court case against Binance.
In June, the regulator filed a lawsuit against exchange Binance and its CEO, Changpeng Zhao, with allegations of violating local securities laws. The SEC said in the lawsuit that Binance affiliate BAM Trading carried out the sale of unregistered securities.
The views and opinions expressed by the author, or anyone mentioned in this article, are for informational purposes only and do not constitute financial, investment or other advice. Investing or trading cryptocurrencies carries a risk of financial loss.