Paradigm, a crypto investment firm, is urging the courts not to accept the argument put forth by the SEC that crypto tokens are essentially temporary securities.
The firm made this plea in an amicus brief filed in the SEC’s case against former Coinbase product manager Ishan Wahi.
Wahi was charged with wire fraud last July as part of an alleged scheme to commit crypto-related insider trading, and the SEC alleges that he offered inside information to his brother and Sameer Ramani, who then allegedly traded based on that knowledge.
The SEC is calling the assets traded securities, but Paradigm argues that they should not be considered securities without considering extrinsic factors.
The company warns that accepting the SEC’s argument could have unintended consequences for the crypto industry.
The broader argument of whether crypto tokens are securities is not new, and the SEC has been pursuing cases against Ripple Labs and Coinbase on this issue.
Industry participants believe that US regulators are jockeying for position in regulating the crypto industry in the absence of comprehensive regulation.