Paradigm Filed Amicus Brief To Avoid SEC Defining Stablecoins As Securities

Key Points:

• Paradigm filed a brief in the US Securities and Exchange Commission’s action against Terra and Do Kwon.
• The company said that it was not a Terra investor.
• The briefing addressed the SEC’s new notion that the algorithmic stablecoin UST is security.

Rodrigo, head of Paradigm’s legal affairs, said that the company filed an amicus brief in the SEC suit vs. Terra and Do Kwon.

According to the amicus brief, Web3 venture capital company Paradigm was not a Terra investor, and the brief was submitted in support of neither party’s motion; its sole purpose was to oppose the SEC’s continuous effort to extend its authority over cryptocurrency.

Rodrigo stated:

Through its enforcement action against Terra, the SEC attempts to bring stablecoins under its remit by advancing the boundless theory that if any instrument can be exchanged for a so-called “crypto asset security,” the instrument itself becomes a “crypto asset security.”

Kwon, who has been on the run from authorities since the collapse of his multibillion-dollar crypto venture in May 2022, was caught this month in Montenegro for trying to travel with fake papers. The SEC sued Terraform Laboratories and Do Kwon in February for deceiving investors and marketing unregistered securities.

According to the court statement, the SEC failed to establish personal jurisdiction in its civil complaint against Kwon since the items mentioned by the agency were accessible worldwide and not intended for US citizens. It also claims that a digital asset implicated in the lawsuit, the stablecoin UST, is not subject to SEC oversight since it is a currency rather than a security.

On April 21, Paradigm issued a policy article on SEC registration issues.

It said that SEC Chair Gary Gensler’s effort to brute force crypto assets that may or may not even be securities into an ill-fitting disclosure framework is poor policy.

The company, which invests hundreds of millions of dollars in crypto and Web3 firms, claims that the SEC fails to give cryptoasset users and investors the necessary information. It also questioned the SEC’s assertions that it provides a feasible route to compliance for crypto businesses.

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Harold

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