Crypto venture capital firm Paradigm files an amicus brief in the SEC lawsuit against Terraform Labs and its founder Do Kwon aiming to push back against the SEC’s continued attempts to expand their jurisdiction over crypto.
Paradigm noted in a blog post that the amicus brief was filed in support of neither party’s motion.
Through its enforcement action against Terra, the SEC, according to Paradigm, is attempting to bring stablecoins under its jurisdiction by advancing the notion that if an instrument can be exchanged for a so-called “crypto asset security,” then the instrument itself qualifies as a “crypto asset security.”
The venture capital firm claims that the SEC’s enforcement action was too late to protect any investors in Terra or to mitigate the effects of Terra’s failure on the overall crypto market.
The classification of an asset as a security should not be based on “speculative” uses, as the SEC did with the Terra tokens like UST, LUNA, “wrapped” LUNA, MIR Tokens, and mAssets, according to Paradigm.
Furthermore, according to the SEC’s logic, practically every good or piece of property in the world can be a security simply because it can be used to purchase a security. Although the Securities Laws are comprehensive and adaptable, the SEC is not permitted to convert any barterable good into a security, according to Paradigm.
In a lawsuit filed in February for defrauding cryptocurrency investors, Terraform Labs and Do Kwon were accused by SEC chair Gary Gensler of failing to disclose to the public all material information regarding a variety of crypto asset securities, most notably LUNA and Terra USD.
Compiled by Coinbold