San Francisco-based crypto-focused investment firm Paradigm has filed an amicus brief in the U.S. Securities and Exchange Commission (SEC) lawsuit against Terraform Labs and its co-founder Do Kwon. The venture capital firm has never been invested in the Terra ecosystem and will not support the SEC or Terra and Do Kwon in the lawsuit.

The VC firm Paradigm filed an amicus brief in US SEC v. Terraform Labs and Do Kwon to push back against the SEC’s attempts to expand its jurisdiction over the crypto market. Paradigm alleges that the SEC abused its power to issue regulatory guidance and enforce enforcement action against crypto companies for violating securities laws.

The legal head of Paradigm, Rodrigo Seira, argues that the SEC’s theory of treating stablecoins as securities would radically expand the definition of security. The SEC led by Gary Gensler has filed lawsuits and taken enforcement action against failed crypto entities like Terra and Do Kwon and Bittrex just to expand its jurisdiction over crypto and actions have failed to protect investors or other parties.

On February 16, the SEC filed suit against Terraform Labs and Do Kwon on several charges, including violating securities laws and fraud. The SEC alleged in the complaint that the algorithmic stablecoin UST, now USTC, is a security. The US SEC said:

“If an instrument can be exchanged for a so-called ‘crypto asset security’, the instrument itself becomes a ‘crypto asset security’.

However, Paradigm claims that the securities laws clearly state that stablecoins are not securities. Stablecoins are designed to have their value tied to fiat or various crypto assets. So it cannot be profitable. The SEC’s theory contradicts decades of federal court guidance and would result in any tradable asset becoming a security.

Do Kwon wants charges dismissed

Attorneys for Do Kwon filed a motion in a U.S. court to dismiss the charges against Terraform Labs and Do Kwon, alleging that the SEC had no jurisdiction over UST and that it is not a certainty.

The South Korean court also stated that Terra (LUNA) is not a security and that UST, an algorithmic stablecoin, cannot be considered securities. The court also rejected the state’s appeal to seize Daniel Shin for violating the Capital Markets Act.

Meanwhile, Coinbase has filed a lawsuit against the SEC to go the legal route for regulatory clarity. The CEO Brian Armstrong hit an NFT and called on the community to “Stand With Crypto”.

Also Read: Amazon NFT Marketplace Launch Delayed

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