Prominent crypto venture firm Paradigm has accused the Securities and Exchange Commission (SEC) of regulatory overreach in an ongoing lawsuit alleging unregistered securities trading by Binance. Paradigm filed a legal brief Friday alleging the SEC aims to “circumvent the rulemaking process” through the high-profile suit.
Paradigm’s amicus brief supports Binance
Paradigm’s amicus brief supports Binance against charges it illegally offered security tokens by failing to register as an exchange or broker-dealer. The firm said the SEC’s interpretation would “upend what we know about securities law” by vastly expanding its authority.
By asserting most crypto assets are securities, Paradigm argues the SEC looks to sidestep its responsibility to formally update outdated rules through proper administrative procedures. This attempt to bypass deliberative rulemaking represents an inappropriate assertion of power, according to Paradigm.
The firm contends that many assets, like commodities, accrue value but clearly fall outside securities laws. Crypto should receive balanced legislation, not “disturbing allegations” weaponized to forcibly rewrite policy, Paradigm said.
Its brief signifies pushback from crypto advocates concerned that the SEC relies on aggressive litigation to dictate the regulatory landscape. Supporters argue the agency’s strategy results in overreach beyond what statutes intended or permitted.
By supporting Binance’s motion to dismiss, Paradigm aims to limit the SEC’s influence on the industry without formal rule updates. However, the regulator asserts that it is appropriately enforcing longstanding securities laws as they are currently written.