The venture capital firm argued that the SEC lacked jurisdiction over the nascent cryptocurrency industry.
Cryptocurrency investment firm Paradigm has filed an amicus brief in support of Binance’s move to dismiss the lawsuit filed against it by the U.S. Securities and Exchange Commission (SEC).
According to an Oct. 13 court filing, the crypto investment firm’s interest in the matter is to ensure that the SEC does not exceed the regulator’s authority by interpreting securities laws in a way that threatens the growth of crypto in the United States and destabilizes other markets.
“Paradigm seeks to participate as an amicus curiae to ensure that the SEC’s overregulation does not become a barrier to innovation or interfere with Congress’ ability to create a sensible, effective regulatory framework for crypto assets.”
An amicus brief is a legal document filed with the court by a party that has no direct interest in the outcome of the case. In this way, a third party can submit opinions and arguments for the court to consider during the litigation process.
SEC’s Interpretation of “Investment Contract”
Paradigm has challenged the SEC’s interpretation of secondary market crypto token sales as investment contracts, claiming that this view is flawed. The company believes that the SEC’s argument is based on the false premise that crypto assets are automatically securities due to their speculative potential.
“Crypto asset sales, especially those on secondary markets, do not involve any promise other than delivery of the crypto asset,” Paradigm wrote.
Paradigm further argues that this interpretation by the SEC would force courts to accept that an “investment contract” need not involve an actual “contract.” This, the company says, could expand the scope of securities laws to cover standard asset transactions.
From this perspective, Paradigm concluded that the SEC’s understanding of cryptocurrency investment contracts is flawed, demonstrating that the regulator lacks the power to oversee the industry.
“The SEC has not received the ‘clear congressional authorization’ needed to conquer the crypto asset industry through its piecemeal approach to enforcement regulation,” it said.
In September, Binance filed to dismiss the SEC’s charges, claiming that cryptocurrency tokens are not securities and do not fall under the regulator’s purview. The exchange further argued that no contractual arrangements existed between token issuers and buyers, and that funds were not pooled into a collective effort.
Meanwhile, Binance has received support from multiple crypto stakeholders, including stablecoin issuer Circle ( USDC ) and nonprofit Investor Choice Advocates Network (ICAN), which filed a similar brief in support of its case against the SEC. #Paradigm #SEC
