By Paradigm is supporting Coinbase’s case against the SEC, an amicus curiae brief filed by the crypto investment firm Monday reveals.
The SEC Faces Scrutiny For Its Rigid Regulatory Approach
In Monday’s briefing, Paradigm criticized the SEC’s heavy-handed regulatory approach, calling the federal agency “a regulator that is refusing to engage in regulation.”
“The SEC’s refusal to initiate a rulemaking continues its ad-hoc approach of regulation-by-enforcement, where attempts at compliance lead only to punishment,” Paradigm’s brief reads in part. “That is not a stable equilibrium.”
Translating to mean “friend of the court,” an amicus curiae brief is often filed by an individual or entity with information relevant to Coinbase’s case against the SEC that may influence the court’s decision.
The cryptocurrency investment firm’s legal saga with the SEC began in July 2022 after the crypto exchange platform asked for regulatory guidance from the federal agency regarding digital assets.
After a lengthy legal back-and-forth, the SEC went on to deny that request – prompting Coinbase to once more challenge the regulator in court, leading to the current developments in Coinbase’s case against the SEC.
Coinbase Finds Support Among the Crypto Community
Paradigm, an investor in Coinbase, previously submitted an amicus curiae brief on Coinbase’s behalf in May 2023, demonstrating the firm’s ongoing support for Coinbase’s case against the SEC.
“The SEC’s delay results in a de facto ban on digital asset trading platforms, which are instructed to register with the SEC, but are not provided a path to do so,” the technology investment company said in the 2023 court filing. “Paradigm is well-positioned to aid this court’s understanding of the important issues raised by Coinbase’s petition.”
1/ The @crypto_council just submitted an amicus brief in support of @coinbase challenging the SEC’s denial of its rulemaking petition.
TL;DR: The SEC’s pursuit of its flawed interpretation of securities laws through regulation by enforcement while refusing to engage in…
— Ji Kim (@_jikim) March 18, 2024
News of Paradigm’s filing comes the same day the Crypto Council for Innovation (CCI) submitted its own amicus curiae brief on behalf of Coinbase, citing concerns that the SEC’s stringent regulatory approach may push crypto businesses overseas.
“In turn, industry participants are fleeing abroad to countries that offer regulatory guidance (e.g., UK, EU, parts of Asia Pacific, etc.),” said Ji Kim, General Counsel and Head of Global Policy for CCI. “And the U.S. is unfortunately losing its role as a leader in the global digital assets financial system, taking a back seat as other countries embark toward the technological frontier.”
Coinbase To Go Overseas?
Just last year, Coinbase CEO Brian Armstrong flirted with the idea of “relocating” the company out of the U.S. if the regulatory environment did not approve, saying “anything is on the table.”
“All Coinbase asks is that the SEC explain what century-old securities laws require of this young two-trillion-dollar industry that deeply desires to comply with the law,” Paradigm’s brief concludes.
An SEC spokesperson was not immediately available for comment.
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