Paradigm Criticizes SEC Over Legal Actions Against Binance and Misinterpretation of Securities Regulations
Summary:
Crypto venture capital firm, Paradigm, criticizes the US SEC for deviating from standard procedures in its legal case against cryptocurrency exchange, Binance. In its amicus brief, Paradigm underscores many of the SEC's concerning practices, including misuse of the Howey Test and arbitrary exemptions of certain assets being categorized as securities. The case has also drawn involvement from Circle, the issuer of USDC Stablecoin, which is challenging the SEC's classification of stablecoins as securities.
Crypto venture capital firm, Paradigm, has taken umbrage with the SEC (Securities and Exchange Commission) in the United States for deviating from standard procedural rules in its present legal case against cryptocurrency market platform, Binance. On Friday, the 29th of September, Paradigm released a public communiqué expressing their concern that the SEC is attempting to change legislation via the serious allegations leveled against Binance, notwithstanding the established procedures for the creation of rules. Paradigm maintains the view that the SEC is overstepping its regulatory mandate, voicing their strong objection to this approach.
In June, the SEC pursued legal proceedings against Binance, accusing it of several infringements of securities laws such as operating without required legal status as an exchange, a broker-dealer, or a clearing agency. Paradigm also noted that the SEC has been following a similar trajectory with various other crypto markets and expressed worry that the SEC's approach could deeply modify the understanding of certain key aspects of securities law.
In their strategic legal document known as an amicus brief, Paradigm detailed their apprehension regarding the SEC's reliance on the Howey Test, a test originating from a 1946 US Supreme Court case, is used to determine if transactions meet the requirements to be considered investment contracts and therefore be subject to securities regulations.
Paradigm underlines that numerous assets are openly promoted, purchased, and traded based on their potential profitability, however, the SEC has continuously exempted such assets from being designated as securities. Their amicus brief highlights instances including gold, silver, and fine art, and argues that the possible increase in value alone does not automatically render their sale a securities transaction.
Recently, the ongoing legal battle between Binance and the SEC has seen the involvement of Circle, the issuer of USDC Stablecoin. Circle argues that the US SEC should not classify stablecoins, like BUSD and USDC, as securities. Their argument hinges on the belief that individuals who purchase these stablecoins are not solely motivated by potential profit from these purchases.
Published At
9/30/2023 6:41:13 AM
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