Skip to content

Paradigm Targets SEC for Overstepping Legal Bounds in Binance Lawsuit

Paradigm has released a statement criticizing the SEC for allegedly bending legal rules in its lawsuit against Binance. The firm also highlights concerns regarding the SEC’s application of the Howey Test, while Circle joins the dispute to defend the classification of stablecoins.

Crypto venture capital firm Paradigm has publicly criticized the United States Securities and Exchange Commission (SEC) for allegedly sidestepping established legal procedures in its ongoing lawsuit against prominent cryptocurrency exchange Binance. According to a statement released on September 29, Paradigm accuses the SEC of leveraging its lawsuit to subtly change the law without following due process.


Questioning SEC’s Tactics and Application of Howey Test

The firm asserts that the SEC's accusations against Binance, which include operating without the necessary registrations, are being utilized as a strategy to redefine securities law fundamentally. Paradigm has expressed deep concerns about how the SEC applies the Howey Test—a key legal standard used to determine whether transactions qualify as investment contracts subject to securities regulations. The firm’s statement brings attention to the SEC’s inconsistent classification of assets like gold, silver, and fine art, which also possess value appreciation potential but are not classified as securities.

Circle, the entity behind the USDC Stablecoin, has recently entered the legal tussle between Binance and the SEC, advocating that stablecoins should not be classified as securities. The company argues that stablecoins like BUSD and USDC do not meet the securities classification criteria as purchasers of these assets do not expect profits solely based on acquisition.