Paradigm moves to defend Binance in its battle with the US SEC.
Paradigm, a venture capital firm, has publicly disapproved of the US Securities and Exchange Commission's (SEC) behavior in its ongoing lawsuit against cryptocurrency exchange Binance.
Issued on September 29th, the firm's statement raises concerns that the SEC is bypassing established rulemaking protocols.
Did you know?
Want to get smarter & wealthier with crypto?
Subscribe - We publish new crypto explainer videos every week!
What is Solana in Crypto? (Beginner-Friendly Animation)
The Paradigm came forward with a stern critique of the SEC for what the firm sees as an attempt to redefine securities laws without following the due process traditionally associated with rulemaking.
The venture capital firm argues that the SEC's litigation against Binance, initiated in June, is part of a broader trend of the agency taking legal action against multiple cryptocurrency platforms for alleged violations of securities laws. These violations include operating without necessary registration as an exchange, broker-dealer, or clearing agency.
The venture capital firm further expresses fears that the SEC's approach could significantly alter the current understanding of securities law in the United States.
Paradigm is particularly concerned about the SEC's interpretation and application of the Howey Test, a long-standing legal framework used to determine what constitutes an investment contract and falls under securities regulations.
Paradigm's amicus brief argues that the SEC has shown inconsistencies in applying the Howey Test. It points out that assets like gold, silver, and fine art are frequently traded based on their profit potential yet have been consistently exempted from being defined as securities. The firm strongly challenges the SEC's position that assets should be categorized as securities merely based on their potential to increase in value.
Paradigm's critique of the SEC reflects growing concerns regarding the agency's regulatory tactics in the cryptocurrency industry. By challenging the SEC's approach to the Binance case and its broader implications for the crypto market, Paradigm has brought attention to a debate that could significantly impact the regulatory landscape for digital assets.
