The SEC filed suit against Binance in June, accusing it of breaking many securities regulations, including as not being registered as an exchange, broker-dealer, or clearing agency.
When it comes to the SEC’s current legal action against Binance, the world’s largest cryptocurrency exchange, the major venture capital company Paradigm has spoken out strongly against what it sees as a divergence from regular regulation norms.
Paradigm made a statement on September 29 accusing the SEC of trying to modify the law without following proper regulatory procedures by using the accusations in its case against Binance.
Paradigm strongly disagrees with the SEC’s novel approach and maintains that the agency has overstepped its regulatory limitations.
In June, the SEC filed suit against Binance, claiming that it had broken many securities laws by, among other things, failing to register as an exchange, broker-dealer, or clearing agency.
Paradigm noted the SEC’s recent trend of pursuing similar claims against numerous cryptocurrency exchanges, causing fear that the SEC’s approach “could radically reshape our understanding of securities law in several critical aspects.”
The Howey test is a legal criteria used by the SEC to ascertain whether a transaction falls within the purview of the securities laws, and Paradigm has voiced concerns that the SEC is using this test too broadly.
Many assets are deliberately advertised, acquired, and sold depending on their profit potential, Paradigm claimed in an amicus brief. Despite this, the SEC has never considered them to be securities.
Paradigm used precious metals and works of art to illustrate that the sale of these items is not automatically considered a security transaction only because of the possibility of value appreciation.
Coinciding with this news, Circle, the company behind USD Coin (USDC), has waded into the current legal battle between Binance and the SEC.
Circle is passionate in its opposition to the SEC classifying stablecoins as securities. The SEC’s effort to regulate stablecoins as securities is contested on the grounds that their acquisition is not motivated by a desire to make a profit, according to proponents of this view.
In conclusion, Paradigm has voiced its displeasure with the SEC over its novel approach to legal action against Binance, which the firm believes exceeds standard regulatory processes and may have far-reaching effects on the cryptocurrency and securities industries.
On the other side of the coin, Circle has entered the fight by arguing in court that the SEC should not classify stablecoins as securities owing to their unique characteristics and applications.
