Venture firm Paradigm is criticizing SECc over the Binance case, citing regulatory concerns. Criticism of the famous company resonates in the cryptocurrency world. Let’s look at the details together.
Paradigm’s criticism of the SEC
Venture capital firm Paradigm has publicly criticized the United States Securities and Exchange Commission (SEC) for taking legal action against cryptocurrency exchange Binance. Paradigm released a statement on September 29.
Paradigm accused the SEC of bypassing standard rulemaking procedures in pursuing allegations against Binance. The firm points out that it does not follow the SEC’s established rulemaking process. He also believes he is overstepping his regulatory boundaries by trying to change existing laws.
Legal action against SEC and Binance
The SEC initiated legal action against Binance in June. In this legal action, the SEC made an important claim. Accordingly, he claimed that there were multiple violations of securities laws. These violations include operating without proper registration as an exchange, broker-dealer or clearing house.
Paradigm also states that the SEC agency is pursuing similar cases against various cryptocurrency exchanges. It also highlights concerns that the regulator’s approach could significantly reshape interpretations of securities law in key areas.
Difficulties with Howey Test administration
Paradigm’s criticism extends to the SEC’s application of the Howey test. Accordingly, this test is a test that the institution frequently uses to determine whether transactions qualify as investment contracts subject to securities regulations.
The firm states that many assets are marketed based on their profit potential. It also emphasizes that it is bought and traded. But he argues that the SEC has consistently exempted them from classification as securities. Paradigm cites examples such as gold, silver, and works of art. He emphasizes that appreciation potential alone does not inherently categorize a sale as a securities transaction.
There are also approaches to stablecoins.
It should be noted that Paradigm is not alone in criticizing the SEC. In particular, Circle supported Binance in its statement yesterday. Circle argues that stablecoins should not be classified as securities.
As Kriptokoin.com, as we mentioned in our news yesterday, it has entered into an ongoing legal dispute between Binance and the SEC. Circle states that individuals purchasing stablecoins are not doing so with the intention of making a profit. He also claims that this further fuels the debate surrounding the regulatory classification of digital assets. While the discussions continue, let’s see how the coming days will shape the industry.
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