Crypto Investment Firm Paradigm Challenges SEC’s Jurisdiction in Bittrex Lawsuit

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By BitcoinWiki News

Key Takeaways:

– Paradigm, a prominent crypto investment firm, challenges the SEC’s authority to regulate secondary markets for crypto assets.
– It files an amicus brief in the SEC’s case against Bittrex, arguing that the regulator’s attempt to expand its jurisdiction is unfounded.
– Paradigm claims that the SEC’s claims against Bittrex and other crypto exchanges differ from previous cases against token sellers.
– The SEC is trying to extend its authority to include downstream sales of crypto assets.
– Bittrex announced the winding down of its US operations due to regulatory challenges and the SEC subsequently charged the exchange for operating an unregistered national securities exchange.
– Paradigm accuses SEC Chair Gary Gensler of inconsistent stance on regulating secondary markets.
– The investment firm argues that even if a cryptocurrency asset was initially sold in an ICO, the SEC has no legal basis to argue that the asset itself constitutes an investment contract.
– Paradigm contends that the few courts that have examined the distinction between token offerings and tokens in secondary markets have recognized that the Howey test does not apply to transactions between third parties.
– Paradigm calls the SEC’s theories unprecedented and urges the court to dismiss the case against Bittrex.


Paradigm, a prominent crypto investment firm, has challenged the authority of the US Securities and Exchange Commission (SEC) to regulate secondary markets for crypto assets. The company has filed an amicus brief in the SEC’s case against cryptocurrency exchange Bittrex, arguing that the regulator is attempting to expand its jurisdiction over crypto secondary markets. Paradigm has stated that the SEC’s claims against Bittrex and other exchanges are fundamentally different from its previous cases against token sellers. The SEC has previously sought to regulate fundraising schemes under the Howey test, but it is now attempting to extend its authority to include downstream sales of crypto assets. Bittrex, a Seattle-based exchange, announced in April that it would wind down its US operations due to regulatory and economic challenges. The SEC subsequently charged Bittrex and its co-founder and former CEO William Shihara for operating an unregistered national securities exchange, broker, and clearing agency. Paradigm has criticized SEC Chair Gary Gensler for his inconsistent stance on regulating secondary markets, arguing that he previously admitted that the agency lacked the authority to regulate these markets in 2021. The investment firm also contends that even if a cryptocurrency asset was initially sold in an initial coin offering (ICO), the SEC has no legal basis to argue that the asset itself constitutes an investment contract. Paradigm urges the court to dismiss the case against Bittrex, stating that the SEC’s theories are unprecedented.

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