Paradigm says SEC ‘wrongfully’ charged Bittrex

Paradigm issued another letter in support of a crypto exchange being targeted by the SEC

article-image

Sharaf Maksumov/Shuttertock modified by Blockworks

share

Crypto investment firm Paradigm has filed an amicus brief in the SEC’s case against exchange Bittrex, claiming the regulator is overstepping its jurisdiction. 

The case should be dismissed because the SEC has “wrongfully” attempted to oversee crypto secondary markets, Paradigm said in the filing, adding that the practice represented an undue extension of the Howey test.  

“The SEC lacks the authority to regulate secondary markets for crypto assets because they do not involve ‘investment contracts’ and are therefore not securities transactions under the agency’s remit,” Paradigm wrote in a blog post Monday. 

The SEC charged Bittrex in April for allegedly operating an unregistered securities exchange, broker and clearing agency. Bittrex filed for bankruptcy about two weeks later. 

The case marked the first of three the SEC has brought against crypto exchanges in recent weeks. Coinbase and Binance are also facing charges from the regulator. 

“The SEC’s claims against Bittrex and the other crypto exchanges are fundamentally different from its many prior cases against token sellers,” Paradigm’s special counsel Rodrigo Seira said in a Monday tweet. “In those prior cases, the SEC exercised its authority to regulate fundraising schemes under the Howey test.”

The filing marks the second time Paradigm has backed an exchange facing legal action from the SEC. In May, shortly after the securities regulator sued Coinbase, Paradigm filed an amicus brief claiming the agency had issued insufficient guidance for crypto firms. 

“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,” Paradigm wrote in a May blog on its Coinbase amicus brief. “That is not how administrative law is supposed to work.”


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the On the Margin newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2023

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Unlocked by Template.png

Research

With the spot ETH ETF approval, the institutions are coming. stETH - given its dominance in marketshare, existing liquid market structures, and highly desirable properties - is poised for institutions.

article-image

The QT taper begins this month…but what does that mean for markets?

article-image

Plus, the rise of RWAs could bring about a significant shift in how real-world investments are managed and accessed

article-image

The distributed cell plan provider started selling its own hotspots in October 2023

article-image

The Brazil-based asset manager’s filing comes during a year of milestone bitcoin and ether fund approvals

article-image

The purchase of five sites in Georgia set to help CleanSpark hit its mid-year operating hash rate target of 20 EH/s

article-image

Plus, it’s beginning to look like we may be in for a cruel summer