Venture capital firm Paradigm has criticized the US Securities and Exchange Commission (SEC) for bypassing standard regulatory procedures in its ongoing legal action against cryptocurrency exchange Binance.
Inside declaration Announced on Friday, September 29, Paradigm alleged that the SEC attempted to use the allegations in its complaint to change the law without following the established rulemaking process. Paradigm firmly believes that the SEC has overstepped its regulatory boundaries and states that it strongly opposes such a tactic..
In June, the SEC filed a lawsuit accusing Binance. multiple violations of securities lawsSuch as operating without the required registration as an exchange, broker-dealer or clearing agent. Paradigm also recently emphasized that: SEC is pursuing similar lawsuits against various cryptocurrency exchanges and expressed concern about the SEC’s conduct “It could fundamentally reshape our understanding of securities law in many critical respects.”
Additionally, Paradigm highlighted issues with loopholes in the SEC’s application of the Howey test. The SEC often relies on the Howey test, which originated in a 1946 U.S. Supreme Court case regarding citrus groves. determine whether transactions meet investment contract criteria and fall within the scope of securities law.
In his friendly summary, paradigm He noted that many assets are actively marketed, purchased and traded based on profit expectations. However, the SEC has always exempted them from being classified as securities. The report also highlighted cases such as gold, silver and works of art, underlining that merely having the potential to appreciate in value does not inherently classify their sale as a securities transaction.
Issuer of USD Coin (US Dollar) Circle recently joined the ongoing legal dispute between Binance and the SEC. Circle believes the SEC should not classify stablecoins as securities.
According to Circle, these assets should not be classified as securities because people who purchase stablecoins are not acting to profit from them.
Translation by Walter Rizzo