Paradigm Criticizes SEC’s Actions Against Bittrex in New Amicus Brief Filing
Crypto investment company Paradigm has filed an amicus brief in the US Securities and Exchange Commission’s (SEC) case against Bittrex, claiming that the regulator is “wrongfully attempting to lay claim over crypto secondary markets.”
The brief filed on July 7th stated that the case against the US-based crypto exchange should be dismissed. It argued that the SEC cannot support extending the Howey test to determine that secondary market sales are investment contract transactions relies upon an unreasonable use of that test to make its claims.
Paradigm’s Amicus Brief
The SEC charged Bittrex in April for allegedly operating an unregistered securities exchange, broker, and clearing agency just weeks after the crypto exchange announced the termination of its US operations. Two other crypto weights – Coinbase and Binance – are also facing similar charges by the SEC.
Paradigm noted that the claims made by the financial regulator against Bittrex and the other crypto exchanges are “fundamentally different” from its many prior cases against token sellers. The previous ones witnessed the SEC exercising its authority to regulate fundraising schemes under the Howey test.
This, however, changed in the recent cases targeting crypto exchanges. Paradigm argued that the SEC is attempting to expand its authority past the initial fundraising transactions to incorporate “downstream” sales of crypto assets.
“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.”
The investment firm’s amicus brief claims that even if a crypto asset was first sold in a fundraising transaction, the financial regulator has “no legal basis” to argue that the asset itself “embodies an investment contract, or that secondary market transactions in that asset are investment contract transactions.”
Amicus Brief for Coinbase
Paradigm, led by Coinbase co-founder Fred Ehrsam, petitioned to file an amicus brief in support of Coinbase in May, a month after the San Francisco-based crypto exchange received a Wells notice from the SEC.
The investment firm backed the exchange’s legal action against the agency, claiming that it had “a strong interest” in ensuring the financial regulator is held accountable for its delays in the company’s petitions.
The filing also criticized the SEC’s failure to provide clear rules or guidance for digital asset firms in the country.
The post Paradigm Criticizes SEC’s Actions Against Bittrex in New Amicus Brief Filing appeared first on CryptoPotato.
Text source: CryptoPotato
