Cryptocurrency

Paradigm argues against New York’s attorney general classification of Ethereum as securities

Paradigm, a cryptocurrency venture capital firm, Amycus briefs A lawsuit between the New York Attorney General (NYAG) and KuCoin was filed after the regulator listed Ethereum (ETH) as a security in the lawsuit.

The NYAG sued KuCoin in March for operating in the state without KuCoin being registered. He added that the exchange facilitates the trading of tokens such as ETH, which are purported securities.

However, Paradigm did not agree with regulators classifying Ether as a security. In a court brief, the company said:

“[New York authorities] They were trying to sidestep due process by claiming that the world’s second-most valuable token was collateral in a lawsuit against an unrelated third party who was unlikely to make a different claim. ”

Paradigm Explains Why ETH Isn’t Security

According to a May 18 court filing, the NYAG’s claim that the ETH token is a security is not supported by law because the asset is “just software and nothing more.” there is [an] An alphanumeric cipher sequence. ”

“OAG confuses the ETH tokens themselves, which are mere software, with the investment contracts under which those tokens were allegedly sold.”

Paradigm further argued that regulators’ reliance on materialization theories endorsed by the U.S. Securities and Exchange Commission (SEC) would create insurmountable challenges for market participants seeking to trade cryptocurrency tokens.

In its lawsuit against Ripple, the SEC argued that tokens sold as part of a secondary market traded investment contract now embody and represent an “investment contract.”

Paradigm added that ETH’s move to proof-of-stake consensus will not turn the asset into a security. The company wrote that ETH validators are compensated for their services and do not have investment contracts, as New York authorities claim.

“Staking does not increase the value of ETH and does not give interest to users, so there is no ‘profit’. Staking is just a way to earn more ETH. ”

In addition, the brief cited several examples of speeches by various regulators stating that ETH is not a security. To support the company’s claims, it cited speeches by former SEC officials, including Chairman Jay Clayton and Commissioner Bill Hinman.

However, this is not the first time Paradigm has filed a court brief in support of the crypto industry. The company has filed a memorandum to prevent the SEC from classifying the failed TerraUSD stablecoin as a security in the lawsuit against Terra and Do Kwon.

Post Paradigm objects to the New York State Attorney General’s classification of Ethereum as the first security to appear on a crypto slate.

Related Articles

Back to top button