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.
Paradigm says that the SEC is attempting to bring stablecoins into its purview through its enforcement action against Terra by furthering the idea that if any instrument can be traded for a so-called “crypto asset security,” the instrument itself becomes a “crypto asset security.”
According to the venture capital firm, the SEC’s enforcement action came too late to shield any Terra investors or lessen the impact of Terra’s failure on the larger crypto market.
Paradigm stated that the Supreme Court has already cautioned that an asset’s classification as a security should not be based on “speculative” uses, like what SEC did with the Terra tokens like UST, LUNA, “wrapped” LUNA, MIR Tokens, and mAssets.
“Moreover, by the SEC’s reasoning, virtually every good or property in the world can be security merely because that good or property can be used to buy a security. While the Securities Laws are broad and flexible, they do not allow the SEC to turn any barterable good into a security,” Paradigm noted.
In February, SEC sued Terraform Labs & Do Kwon for scamming crypto investors with SEC chair Gary Gensler saying both of them failed to provide the public with full, fair, and truthful disclosure as required for a host of crypto asset securities, most notably for LUNA and Terra USD.
