Paradigm Challenges SEC’s Actions Against Binance

Venture company Paradigm is not happy with the United States Securities and Exchange Commission (SEC) over its current legal actions against crypto exchange Binance.

On Friday, Sept. 29, Paradigm said the SEC is trying to change the law without following the usual steps. They believe the SEC is going too far with its rules and they don’t support this way of doing things.

In June, the SEC took legal action against Binance saying it broke several financial laws, like not registering as an exchange or broker. Paradigm pointed out that the SEC has been taking similar actions against many crypto exchanges and worries that this could change our understanding of securities laws in a big way.

Paradigm also shared concerns about the SEC’s use of the Howey test. This test, which comes from a 1946 U.S. Supreme Court case, is often used by the SEC to decide if transactions need to follow special investment rules.

In a legal document, Paradigm argued that many assets, like gold and art, are bought and sold with the hope of earning money. However, the SEC does not call them securities. They highlighted that just because something can increase in value doesn’t automatically mean selling it should be seen as a security transaction.

Circle Steps Into the Legal Fight

USD Coin company Circle has also joined the legal discussion between Binance and the SEC. Circle believes the SEC should not call stablecoins securities.

Circle suggests that these assets should not be treated as securities because people do not buy stablecoins to make a profit.