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Paradigm, a notable venture capital firm, has raised concerns over the United States Securities and Exchange Commission's (SEC) approach towards the popular cryptocurrency platform, Binance. The SEC's recent legal pursuit of Binance allegedly deviates from the conventional rule-setting procedures, leading Paradigm to voice its reservations.
On Friday, September 29, Paradigm expressed its belief that the SEC is possibly overstepping its regulatory purview. The SEC, in its quest to redefine the legal landscape, seems to be disregarding established protocols, Paradigm pointed out.
Earlier in June, Binance came under the SEC's radar, with accusations ranging from operating without mandatory registration to various securities law infringements. Paradigm took this opportunity to note the SEC's pattern of targeting multiple crypto exchanges in similar manners. There's growing unease, as highlighted by Paradigm, that such actions by the SEC could dramatically alter existing securities law understandings in several key areas.
One main point of contention is the SEC's application of the Howey test. This test, stemming from a 1946 U.S. Supreme Court verdict related to citrus groves, aids the SEC in determining if certain transactions can be termed as investment contracts and if they are subject to securities guidelines. Paradigm's brief sheds light on the fact that while many assets, like gold, silver, and artwork, have the prospect of value growth, the SEC has typically not labeled them as securities.
In related developments, Circle, the issuer of the USD Coin (USDC), has joined the fray, siding with Binance in the ongoing legal tussle. Circle's primary contention revolves around stablecoins and the assertion that these shouldn't fall under the "securities" classification. Their reasoning stems from the fact that when people acquire stablecoins, their intention isn't profit generation.
