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.
In a July 11 Twitter thread, Seira added his thoughts after an amicus brief filing from Paradigm, arguing that the U.S. Securities and Exchange Commission’s (SEC) case against U.S.-based crypto exchange Bittrex should be “dismissed,” as it relies upon an unreasonable use of the Howey test to make its claims.
The SEC’s lawsuit against Bittrex is the first of three cases that the SEC has brought in rapid succession against crypto exchanges. Through these actions, the SEC is wrongfully attempting to lay claim over crypto secondary markets.
— Rodrigo (@RSSH273) July 10, 2023
On July 7, Paradigm filed an amicus brief claiming the financial regulator overstepped its jurisdiction.
In his thread, Seira also pointed out that SEC Chair Gary Gensler had previously admitted that crypto exchanges did not have an adequate regulatory framework, making it clear, in his view, that the regulator lacks sufficient authority to regulate these secondary markets.
Seira made similar arguments in a July 7 blog post, noting the SEC lacks authority because crypto assets do not involve “investment contracts.” As a result, crypto assets do not fall under the agency’s remit.
“Until the SEC engages in the rulemaking Coinbase has requested, the digital-assets industry is stuck in limbo, simultaneously told to ‘come in and register’ yet having no effective means of doing so,” he said.
The SEC first filed a complaint against Bittrex on April 17. Nearly two weeks later, on April 30, the exchange surrendered its Florida money transmitter license before eventually filing for bankruptcy on May 8.
This also marks the second time that Paradigm has offered its support to a crypto organization facing legal action from the SEC.
On May 11, Paradigm petitioned to file an amicus brief in support of Coinbase, which claimed that the SEC had failed to provide clear rules or guidance for digital asset firms in the United States.