Paradigm, a crypto investment firm, has criticized the United States Securities and Exchange Commission (SEC) for its pursuit of crypto exchange Bittrex, arguing that the regulator is unjustly trying to regulate secondary crypto markets.
Rodrigo Seira, special counsel for Paradigm, expressed his views on Twitter, following Paradigm’s amicus brief filing that called for the dismissal of the SEC’s case against Bittrex. Seira stated that the SEC’s claims rely on an unreasonable application of the Howey test.
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Paradigm filed the amicus brief on July 7, asserting that the financial regulator exceeded its jurisdiction.
Seira further highlighted that SEC Chair Gary Gensler had previously acknowledged the absence of a sufficient regulatory framework for crypto exchanges.
Seira argued that this acknowledgment indicates a lack of authority for the regulator to oversee these secondary markets.
Seira also emphasized these points in a blog post on July 7, where he pointed out that crypto assets do not involve investment contracts, and therefore, they fall outside the SEC’s purview.
He criticized the SEC for instructing the digital-assets industry to register without providing effective means for doing so.
Seira urged the SEC to engage in the rulemaking process requested by Coinbase, another crypto organization facing legal action from the SEC, in order to provide clarity and resolve the industry’s regulatory uncertainties.
The SEC initially filed a complaint against Bittrex on April 17. Subsequently, Bittrex surrendered its Florida money transmitter license on April 30 and eventually filed for bankruptcy on May 8.
This is not the first time Paradigm has supported a crypto organization facing SEC legal action.
On May 11, Paradigm sought to file an amicus brief in support of Coinbase, arguing that the SEC had failed to provide clear rules or guidance for digital asset firms operating in the United States.
Paradigm’s criticism of the SEC’s approach reflects a growing concern within the crypto industry about regulatory ambiguity and the need for a comprehensive regulatory framework that considers the unique characteristics of digital assets.
The outcome of the Bittrex case and the SEC’s response to industry demands for clarity will significantly impact the future of crypto exchanges and secondary markets in the United States.
