In a recent development, Paradigm filed an amicus brief in the ongoing lawsuit between the U.S. Securities and Exchange Commission (SEC) and Binance. Although it had no direct financial interest in the outcome of the case, Paradigm took a stand against what it perceived as excessive government interference in the United States.
An amicus brief can be defined as a legal document filed with appellate courts that is intended to assist the court by providing additional relevant information or arguments that the court may wish to consider before making its decision.
The SEC's lawsuit against Binance is one of three major lawsuits filed against cryptocurrency exchanges, and the agency is trying to expand its authority over cryptocurrency markets. This move was criticized by Paradigm, which argued that the SEC was acting outside its authority.
Paradigm's filing highlights several key problems with the SEC's approach. First, it challenges the SEC's argument that an “investment agreement” does not require a “contract.” Paradigm argues that this interpretation conflicts with statutory language and case law that clearly state that an “investment contract” requires contractual commitments that promise future value.
Second, Paradigm warns that the SEC's theory could potentially bring ordinary asset sales under the purview of securities laws.
Finally, Paradigm argues that the SEC's attempt to regulate crypto assets through its “investment contract” interpretation fails under the “Big Questions Doctrine.” The Big Questions Doctrine is known as a principle of statutory interpretation in United States administrative law.
While Paradigm acknowledges that there are regulatory gaps in the crypto world, it insists that it is the responsibility of Congress, not the SEC, to address these gaps.
*This is not investment advice.