The SEC has always turned a deaf ear to denunciations of abuse of power by the crypto community. Would she have fired blank weapons? Lately, Paradigm has come to the forefront. The venture capital firm indeed blames the actions of the regulator of digital assets. The latter would have exceeds the limits in the case opposing him to the crypto giant Binance.
Binance, guinea pig of a Machiavellian SEC?
Binance and CZ have already cited abuse of discretion in a joint motion asking the court to dismiss the SEC’s lawsuits. Instead of clarifying things from the start, this cryptocurrency market regulatory institution decided to attack several crypto exchanges (including Binance) arbitrarily.
“ Paradigm calls out the SEC, saying it is using the allegations not only to accuse, but also to modify the law, bypassing the usual regulatory process. »
Thus, the list of anti-SEC continues to grow. According to CointelegraphParadigm would have discovered the U.S. Securities and Exchange Commission shenanigans in the Binance affair. The venture capital firm did not hesitate to make a mention of it in its amicus curiae brief filing in the Binance vs. SEC case.
“ In this case, the SEC is attempting to leverage the troubling allegations it makes in its complaint to change the law while circumventing the rulemaking process. The SEC is clearly acting outside the framework of his authority and we oppose this maneuver », we can read in said communication.
In the introduction, Paradigm clarified that it has no stake in Binance and does not hope to make profits through this approach. “ However, we believe it is essential to oppose government overreach, regardless of who is defending », specifies Rodrigo Seira.
Paradigm said the SEC’s attack on at least three cryptocurrency exchanges demonstrates how badly it wants to control secondary crypto markets.
However, in his latest testimony to Congress, Gary Gensler admitted that his agency has no power to regulate these same markets. “ Exchanges trading these crypto assets have no regulatory framework “, he said.
Binance affair and securities regulation
In its pro-Binance (BNB) amicus curiae brief, Paradigm pointed out SEC theory affecting the bases of securities law.
First, the SEC would force the Court to admit thatan “investment contract” has no need for a contract. However, the law requires contractual commitments for any investment contract.
“ Selling a cryptoasset, especially in secondary markets, promises nothing other than delivery of the cryptoasset. SEC Can’t Demand Formal Contract Where None Exists Thanks to Legal Trick », Specifies Paradigm.
Then, the logic of the SEC aims at a classification of all sales of any asset as securities. This will make it easy for it to apply its own laws to these assets.
Gold, ” courts have long held that just because an asset may increase in value due to market forces does not mean that there is a ‘reasonable expectation of profit’ making the sale of the asset a contract of investment “. Furthermore, the sale of this asset does not mean the creation of a joint venture, and consequently an investment contract.
And finally, Paradigm describes the interpretation of the SEC, executioner of Binance, of the “investment contract” as unreasonable.
“ The regulation of crypto-assets is of such economic and political importance that SEC needs ‘clear authorization from Congress’ to engage in such regulation. A 77-year-old interpretation (Howey) of a 90-year-old law (the Securities Act) hardly provides this clarity. “, we read in the last lines of this brief supporting Binance, CZ’s crypto exchange.
Pro-bitcoin Senator Cynthia Lummis has already called the SEC and Gensler to order in an amicus curiae brief in favor of the cryptocurrency exchange Coinbase. In it, she emphasized that “thea SEC cannot legislate by application “.
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