Rodrigo Seira, Paradigm’s Special Counsel took a shot at the United States market watchdog, saying that the SEC’s efforts to regulate secondary crypto markets lack legal justification. Citing the commission’s recent litigation against crypto exchange Bittrex, Seira posted a long Twitter thread explaining why he believed that the court should dismiss the case.
A few days ago, Paradigm filed an amicus brief in SEC vs. Bittrex that rejected the regulator’s attempt to expand its jurisdiction over crypto secondary markets. The filing argued that digital assets do not involve “investment contracts” and are therefore not securities transactions under the agency’s remit.
Moreover, a review of each appeal case to determine the most appropriate Howey affirms that no court has ever found that an asset that is the subject of an investment contract transaction is a security or that an asset in a secondary market is a securities transaction. And therefore, the Bittrex complaint should be “dismissed” since it bases its allegations on an arbitrary application of the Howey test, Seira concluded.
This is not the first time Paradigm has lent its assistance to a crypto entity that is being sued by the SEC. Back in Dec 2022, Paradigm along with the U.S. lobby group Blockchain Association filed amici briefs to lend support to blockchain firm Ripple Labs Inc. in the ongoing lawsuit against the Securities regulator.
Then, on May 11, this year, the firm requested to submit an amicus brief in support of Coinbase, arguing that the SEC had failed to establish clear guidelines or rules for digital asset companies operating in the United States.
The crypto investment firm earlier lambasted SEC chair Gary Gensler’s proposal to redefine the term exchange.” If approved, it would put decentralized exchanges under the Securities and Exchange Commission’s jurisdiction.
Paradigm Criticized SEC’s ‘Incoherent’ Attempt To Control Decentralized Exchanges
On June 8, it sent a detailed 14-page letter to the SEC secretary, Vanessa Countryman, referring to the SEC’s proposed redefining of the term “exchange” under the 1934 Securities Exchange Act.
To put things in perspective, the market regulator plans to amend the 89-year-old law so that decentralized exchanges [DEXes] and decentralized financing [DeFi] would be included in the definition of “exchange.” Since the term DEX contains the word “exchange,” the SEC intends to consider it similar to a securities or stock exchange.