2023-10-14 18:00 |
Crypto investment firm Paradigm filed an amicus brief to support Binance’s move to dismiss the U.S. Securities and Exchange Commission (SEC) lawsuit against it.
According to an Oct. 13 court filing, the crypto investment firm interest in the matter revolves around ensuring that the SEC does not interpret the securities laws in a manner that threatens the development of crypto technology in the United States and destabilizes other markets that might be outside of the purview of the regulator.
“Paradigm seeks to participate as an amicus here to ensure that the SEC’s regulatory overreach does not serve as an impediment to innovation, and does not interfere with Congress’s ability to create a framework for sensible, effective regulation of crypto assets.”
An amicus brief is a legal document submitted to the court by a party that has no direct interest in the outcome of the case. In this way, third parties can submit opinions and arguments for the court to consider during proceedings.
SEC’s interpretation of ‘investment contract’Paradigm challenged the SEC’s interpretation of secondary market crypto token sales as investment contracts, asserting that this perspective is flawed. The firm contends that the SEC’s argument is based on the erroneous premise that a crypto asset is automatically a security due to its speculative potential.
“A crypto asset sale, particularly one on secondary markets, promises nothing other than the delivery of the crypto asset,” Paradigm wrote.
Paradigm further argues that this SEC interpretation would necessitate the Court to accept that an “investment contract” need not involve an actual “contract.” According to the firm, this could extend the reach of securities laws to encompass standard asset transactions.
From this standpoint, Paradigm concluded that the SEC’s flawed understanding of investment contracts in cryptocurrency suggests that the regulator lacks the authority to oversee the industry. It said:
“The SEC does not have the ‘clear congressional authorization’ it needs to subjugate the crypto assets industry through its piecemeal approach of regulation by enforcement.”
In September, Binance moved to dismiss the SEC charges against it, claiming that cryptocurrency tokens are not securities and fall outside the purview of the regulatory authority. The exchange further argues that no contractual arrangement exists between token issuers and buyers, and funds are not pooled into a collective endeavor.
Meanwhile, Binance has enjoyed support from several crypto stakeholders, including stablecoin issuer Circle (USDC) and a non-profit organization, Investor Choice Advocates Network (ICAN), who filed similar briefs supporting its case against the SEC.
The post Paradigm backs Binance in move to dismiss SEC charges appeared first on CryptoSlate.
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