SEC Oversteps Its Authority: Paradigm’s Point of View
Crypto investment firm Paradigm’s special counsel Rodrigo Seira has slammed the United States securities regulator for “wrongfully” pursuing crypto exchange Bittrex in an attempt to police secondary crypto markets.
Paradigm Counsel’s Argument
In a July 11 Twitter thread, Seira criticized the SEC’s case against U.S.-based crypto exchange Bittrex, arguing that the case should be “dismissed.” He maintains that the regulator’s approach relies on an unreasonable use of the Howey test to stake its claims.
Paradigm’s Amicus Brief
On July 7, Paradigm filed an amicus brief, declaring that the financial regulator had indeed overstepped its jurisdiction. Seira reiterated this stance in his thread, indicating that the SEC Chair Gary Gensler had previously conceded that crypto exchanges lacked a comprehensive regulatory framework.
Why SEC Lacks Authority
Seira, in his July 7 blog post, explained that the SEC lacks authority because crypto assets do not constitute “investment contracts.” As a result, crypto assets do not fall within the agency’s jurisdiction.
Bittrex’s Battle with SEC
The SEC first registered a complaint against Bittrex on April 17. Bittrex surrendered its Florida money transmitter license on April 30 before eventually filing for bankruptcy on May 8.
Paradigm’s Continued Support
This marks the second time that Paradigm has offered its support to a crypto organization facing legal action from the SEC. Paradigm previously filed an amicus brief in support of Coinbase, asserting that the SEC had not provided clear rules or guidance for digital asset firms in the United States.
A Regulatory Conundrum
In conclusion, Paradigm’s counsel Rodrigo Seira’s criticisms point to a significant regulatory conundrum in the cryptocurrency market. The SEC, in its attempt to enforce existing securities laws, is accused of overstepping its jurisdiction. Meanwhile, crypto firms, such as Bittrex and Coinbase, contend with an unclear and unsettled regulatory environment.
As Seira stated, the digital-assets industry finds itself in a peculiar limbo, facing expectations to comply with regulatory norms that do not seem to be clearly defined or effectively implemented for their unique contexts. The resolution of this clash between regulators and the burgeoning crypto industry will likely have profound implications for the future of digital assets in the United States and globally.