Major venture capital firm Paradigm has strongly criticized the United States Securities and Exchange Commission (SEC) for what it believes is a bypass of established regulatory procedures in its ongoing legal battle against Binance.
On September 29, Paradigm filed an amicus brief in the SEC vs. Binance case, expressing its concern on SEC’s actions. It believes that the SEC is overstepping its jurisdiction and it unequivocally “rejects this maneuver.”
Notably, the regulatory body is aiming to strategically determine that secondary market sales are investment contract transactions. Paradigm stated that the SEC is attempting “to leverage the disturbing allegations it levies in its complaint to change the law while circumventing the rulemaking process.”
Moreover, in a press release, the venture capital firm explicitly stated that it has no financial interests or investments in Binance. However, it underlines the importance of resisting government overreach and the need to uphold fundamental principles, irrespective of the identity of the accused party.
Circle Joins Paradigm
Interestingly, on September 28, the second largest stablecoin issuer Circle also filed an independent amicus brief in the same case. It stated that “payment stablecoins, when considered independently, lack the fundamental characteristics of an investment contract” because purchasers of these assets do not profit from them. As a result, they do not fall within the regulatory purview of the SEC’s securities laws.
Additionally, Circle pointed out that decades of legal precedent firmly reinforce that the sale of an asset, detached from any subsequent obligations or commitments from the seller, does not suffice to establish an investment contract.
SEC’s Actions Prompt Criticism
In June, the SEC alleged that Binance.US is an unregistered national securities exchange and is in violation of the Securities Act. The SEC’s lawsuit is part of a broader regulatory strategy to control secondary digital asset markets. This move has sparked criticism from various quarters.
These amicus briefs serve as evidence of substantial support for Binance, showcasing a sense of unity among firms in their collective resistance against what they perceive as the SEC’s blind enforcement actions.
Related reading : Bitcoin Plunges Below $26,000 As SEC Sues Binance
It is worth noting that Binance is not the only target of the SEC’s enforcement actions. Even Coinbase has found itself facing legal action in June this year. Coinbase had made diligent efforts to comply with financial regulations and had approached the SEC for guidance on compliance, but the agency failed to provide clear direction.
Furthermore, recent reports suggest that the SEC is planning to launch new enforcement actions against both small and large digital asset companies.
