Paradigm Counsel Accuses SEC of Overreach in Crypto Market Regulation
Crypto investment firm Paradigm has submitted an amicus brief in the ongoing US SEC vs crypto exchange Bittrex case, asserting that the regulator is “wrongfully attempting” to oversee crypto secondary markets.
The US Securities and Exchange Commission (SEC) case against Bittrex should be “dismissed,” Paradigm’s special counsel Rodrigo Seira, wrote in a blog.
“The court should dismiss this case and the SEC should join Congress in working on crypto legislation that supports innovation and protects investors.”
According to Seira the SEC’s claims against Bittrex and other crypto exchanges fundamentally differ “from its many prior cases against token sellers.”
The SEC’s recent practices represented an unreasonable use of the Howey test – a legal test used in the US to determine whether a transaction qualifies as an investment contract.
Seira wrote that the regulator has no legal grounds to argue that a crypto asset itself is an investment contract, or that secondary market transactions in that asset are investment contract transactions.
“The SEC lacks the authority to regulate secondary markets for crypto assets because they do not involve ‘investment contracts’ and are therefore not securities transactions under the agency’s remit.”
Paradigm has previously backed an exchange facing legal action from the regulator. In May, the firm filed a similar amicus brief in support of Coinbase, claiming that SEC lacks clear guidance for crypto firms.
The US regulator charged Bittrex in April for operating an unregistered national securities exchange, broker, and clearing agency. Shortly after, the exchange filed for Chapter 11 bankruptcy in a federal court in Delaware.
The SEC’s case against Bittrex marked the first of three lawsuits against
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