Rodrigo Sierra Silva, special counsel for crypto-focused investment firm Paradigm, blasted the United States Securities and Exchange Commission (SEC) for overstepping its boundary in its case against crypto exchange Bittrex citing, “the agency is wrongfully attempting to lay claim over crypto secondary markets.”
Over a recent couple of months, several digital assets-focused companies, industry professionals, and cryptocurrency enthusiasts have come out against the American watchdog for equitable and transparent regulations that promote innovation and safeguard investors while resisting the SEC’s alleged overreach.
These voices have grown stronger after the SEC’s recent attack on the two cryptocurrency giants, Binance and Coinbase, inciting a wave of protests from crypto enthusiasts and industry veterans, alike. Crypto proponents have accused the regulatory agency of forging ahead without clarifying its reasons and providing laws backing up its decisions.
SEC Wrongfully Targets Bittrex
In the latest development, the Paradigm lawyer criticized the SEC along with its Chair Gary Gensler for the baseless and unprovoked war, the agency has been waging against the digital assets sector. On July 10, Silva took to Twitter arguing the agency has “wrongfully” pursued crypto exchange Bittrex in an attempt to police secondary crypto markets. He argued the case against 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
In a string of threads, Silva condemned the SEC noting the regulator doesn’t have jurisdiction over secondary markets for crypto assets because they do not involve investment contracts and are, therefore, not securities transactions under the agency’s remit.
In addition, he also turned against Gensler explaining the SEC chair 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. Silva wrote,
“The SEC is attempting to expand its authority past the initial fundraising transactions, to encompass downstream sales of crypto assets.”
Paradigm Stands Up Against the SEC
This comes shortly after Paradigm filed an amicus brief claiming the financial regulator overstepped its jurisdiction on July 7. The crypto investment firm’s amicus filing comes almost three months after the securities regulator sued the crypto exchange for allegedly operating an unregistered securities exchange, broker, and clearing agency in the United States.
Furthermore, in June, Paradigm sent a letter to the SEC secretary Vanessa Countryman, blasting the American watchdog’s attempt to redefine the term “exchange”, which sought to merge both decentralized exchanges (DEX) and decentralized finance (DeFi) into the definition. As per the amendment, the SEC planned to treat DEXs the same way as a security or stock exchange because the term “Decentralized Exchange” contains the word “exchange.”
Gensler’s SEC wants to brute force crypto into an ill-fitting disclosure framework
In our latest piece, we show why this is a bad policy that fails to give crypto users and investors the info they need, or provide entrepreneurs w/ a viable path to complyhttps://t.co/jOpxYJSl6U
— Rodrigo (@RSSH273) April 20, 2023
Earlier this year, Paradigm had also accused the SEC of abusing its powers by attempting to expand its jurisdiction instead of setting parameters on the extent to which securities law applies to digital assets suggesting that the current SEC disclosure framework is “unfit” for the cryptocurrency markets.
