Paradigm counsel, Rodrigo Seira, strongly criticized the United States Securities and Exchange Commission (SEC) for what he considers a wrongful pursuit of crypto exchange Bittrex, asserting that the regulator is overstepping its jurisdiction in an attempt to police secondary crypto markets.

In a series of Twitter posts on July 11, Seira expressed his thoughts following the filing of an amicus brief by Paradigm, which argues for the dismissal of the SEC’s case against Bittrex. The brief claims that the SEC relies on an unreasonable interpretation of the Howey test to support its claims. Paradigm filed the amicus brief on July 7, asserting that the financial regulator exceeded its jurisdiction.

SEC’s Inadequate Regulatory Framework

Seira further highlighted that SEC Chair Gary Gensler had previously acknowledged the lack of an adequate regulatory framework for crypto exchanges. This, in Seira’s opinion, indicates that the SEC lacks the necessary authority to regulate these secondary markets effectively.

An image to represent crypto market.

Similar arguments were presented by Seira in a blog post on July 7. He noted that the SEC lacks authority over crypto assets because they do not involve “investment contracts” and, therefore, fall outside the agency’s purview.

Seira emphasized the need for the SEC to engage in the rulemaking requested by Coinbase. This is because the absence of clear regulations creates uncertainty within the digital assets industry.

Legal Action Against Bittrex and Coinbase

The SEC initially filed a complaint against Bittrex on April 17. Subsequently, on April 30, the exchange surrendered its Florida money transmitter license and eventually filed for bankruptcy on May 8. This is the second time that Paradigm has provided 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. He argued that the SEC has failed to provide clear rules or guidance for digital asset firms in the United States.

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