Paradigm’s Legal Director Shares His Views on SEC’s Lawsuit Against Terra and Do Kwon

On April 25th, Rodrigo, the legal director of Paradigm, said on Twitter: “Paradigm submitted a amicus curiae briefing in the US SEC’s lawsuit against Terra and Do Kwon. Paradigm is not an investor in Terra, and the briefing we submitted does not support any party’s motion. Our only interest is to counter the SEC’s attempt to continue to expand its jurisdiction over cryptocurrencies.” Rodrigo mentioned: Through enforcement actions against Terra, the SEC attempts to advance an infinite theory that includes stable currency within its jurisdiction, that is, if any instrument can be traded as a so-called “crypto asset security,” then the instrument itself will become a “crypto asset security. Our briefing focuses on responding to the SEC’s new theory that algorithmic stable currency UST is a security. The SEC’s theory of UST is a supplement to the core claims in litigation. Nevertheless, we believe it is crucial that Judge Rakoff, who is responsible for this case, avoid unintentionally supporting this unsupported theory, and that the US Securities and Exchange Commission can seek to widely apply it to other stable currencies

Paradigm: In order to avoid SEC defining stable currency as securities, amicus curiae briefing has been submitted in Terra case

In a recent tweet, Rodrigo, the legal director of Paradigm, shared his thoughts on the ongoing lawsuit against Terra and Do Kwon by the US Securities and Exchange Commission (SEC). In the tweet, Rodrigo stated that Paradigm has submitted an amicus curiae briefing to counter the SEC’s attempt to expand its jurisdiction over cryptocurrencies. He further emphasised on the importance of Judge Rakoff avoiding supporting the SEC’s unsupported theory, which could lead to wide application on other stable currencies.

The Battle Between SEC, Terra, and Do Kwon

The US SEC has been battling with Terra, a South Korean blockchain project, and its founder, Do Kwon, since 26 months. The SEC has accused Terra and Do Kwon of conducting an unregistered securities offering by selling their stablecoin called “Dos” to US investors. Terra is fighting against the accusation, stating that “Dos” is not a security but rather a cryptocurrency, which is exempt from securities regulations.

Paradigm’s Amicus Curiae Briefing

Paradigm, a digital asset investment firm, submitted an amicus curiae briefing to the US SEC, in support of Terra and Do Kwon. In the briefing, Paradigm argued that algorithmic stable currency UST, which is the focus of the SEC’s new theory, is not a security.
Paradigm reiterated that their only interest in submitting the briefing was to counter the SEC’s attempts to expand its jurisdiction over cryptocurrencies. They also made it clear that they are not investors in Terra and that their briefing does not support any party’s motion.

The SEC’s Expanded Jurisdiction Over Cryptocurrencies

The SEC has been using enforcement actions against crypto projects to advance an infinite theory that includes stable currencies within its jurisdiction. According to Rodrigo, this means that if any instrument can be traded as a “crypto asset security,” then the instrument itself will become a “crypto asset security.”
Rodrigo believes that the SEC’s theory of UST is a supplement to the core claims in litigation. However, he emphasised that it is crucial that Judge Rakoff avoids unintentionally supporting this unsupported theory. The US Securities and Exchange Commission should also avoid seeking to widely apply it to other stable currencies.

Conclusion

In conclusion, Paradigm has submitted an amicus curiae briefing in the ongoing lawsuit against Terra and Do Kwon by the US SEC. The briefing is to counter the SEC’s attempt to expand its jurisdiction over cryptocurrencies. Paradigm argued that algorithmic stable currency UST is not a security, and therefore, should not be under SEC’s jurisdiction. Rodrigo highlighted the importance of Judge Rakoff avoiding unintentionally supporting the SEC’s unsupported theory and the SEC avoiding seeking to widely apply it to other stable currencies.

FAQs

1. What is an amicus curiae briefing?
An amicus curiae briefing is a legal document submitted by a third party to a court to provide relevant information that could sway the court’s decision.
2. What is UST?
UST is an algorithmic stable currency created by Terra.
3. Why is the SEC trying to expand its jurisdiction over cryptocurrencies?
The SEC is trying to expand its jurisdiction over cryptocurrencies to regulate them under securities laws to prevent fraudulent activities in the crypto market.