Paradigm Files Ninth Circuit Amicus Brief to Oppose State Encroachment on Federal Regulation

This month, Paradigm filed amicus briefs in KalshiEX LLC v. Hendrick and Crypto.com v. Hendrick, two Ninth Circuit cases regarding Nevada’s efforts to treat federally regulated swaps as gambling. As we explained in our Third Circuit (New Jersey) and Fourth Circuit (Maryland) briefs, Congress decided decades ago that the CFTC, not fifty different states, sets the rules for these markets. Nevada’s position ignores that history, and the Ninth Circuit should not be similarly tempted by the Silver State’s false gloss on history.

Beginning with the Commodity Exchange Act and culminating in the creation of the CFTC in 1974, Congress has consistently established and defended a uniform federal framework for derivatives markets, making clear that this framework preempts conflicting state law to ensure a comprehensive national rule base. This benefits consumers, regulated parties, and rule of law. 

As we argue in our brief, the contracts here fall squarely within the CFTC’s exclusive jurisdiction. Nevada’s attempt to regulate swaps under state gaming laws under a legal argument that amounts to not much more than “well, it quacks like a duck” would resurrect exactly the kind of fragmented regulation Congress affirmatively eliminated. New technology does not mean any state can make up new rules. 

We urge the Ninth Circuit to follow statutory text in this case, which is clear and unambiguous.