Paradigm Criticizes SEC for Bypassing Rulemaking Procedures in Binance Case
Paradigm, a crypto venture capital firm, has expressed its criticism towards the United States Securities and Exchange Commission (SEC) for not following standard rulemaking procedures in their current legal action against cryptocurrency exchange Binance. In a statement released on Friday, Sept. 29, Paradigm argued that the SEC is using the accusations in its complaint as a way to change the law without going through the established rulemaking process. Paradigm firmly believes that the SEC is overstepping its regulatory boundaries and opposes this approach.
SEC’s Allegations Against Binance
The SEC initiated legal action against Binance in June, accusing the exchange of multiple violations of securities laws, including operating without the necessary registration as an exchange, broker-dealer, or clearing agency. Paradigm highlighted that the SEC has been pursuing similar cases against various crypto exchanges recently and expressed concerns that the SEC’s stance could significantly impact our understanding of securities law.
Criticism of Howey Test Application
Paradigm also raised concerns about the SEC’s application of the Howey Test. The SEC often uses this test to determine if transactions meet the criteria for investment contracts and fall under securities regulations. Paradigm argued that many assets are actively marketed and traded based on their profit potential but are exempted from being classified as securities by the SEC. They cited examples like gold, silver, and fine art to highlight that potential value appreciation does not automatically make a sale a security transaction.
Circle Joins Legal Dispute
Circle, the issuer of USDC Stablecoin, has become involved in the ongoing legal dispute between Binance and the SEC. Circle believes that stablecoins like BUSD and USDC should not be classified as securities. They argue that individuals acquiring these stablecoins do not expect to make profits solely from their acquisition.
Hot Take: Paradigm Challenges SEC’s Actions Against Binance
Paradigm, a crypto venture capital firm, has criticized the SEC for bypassing standard rulemaking procedures in its legal action against Binance. The firm argues that the SEC is using the accusations in its complaint to alter the law without following the established process. Paradigm believes that the SEC is overstepping its regulatory boundaries and opposes this tactic. They also express concerns about the SEC’s application of the Howey Test, stating that many assets are actively marketed and traded based on profit potential but are exempted from being classified as securities. Circle has joined the dispute, asserting that stablecoins like BUSD and USDC should not be categorized as securities.
By
By
By
By