SEC to Sue Paxos for the Issuance of Binance BUSD Stablecoin
Lately, stablecoin issuer Paxos is being probed by regulators in New York. Adding to this, the Securities and Exchange Commission [SEC] is planning to sue Paxos for issuing the stablecoin Binance USD coin [BUSD].
According to a recent report by the Wall Street Journal, the SEC sent out a letter to Paxos. In the letter, the regulator notified Paxos of “a possible enforcement action.”
The SEC is alleging that BUSD is an unregistered security. Therefore, the regulator is suing the firm for “violating investor protection laws.” Paxos has not only listed the stablecoin but jointly launched it with Binance back in 2019. Currently, Binance only licenses the brand but BUSD is issued and owned by Paxos. Nevertheless, Binance claims to be “monitoring the situation.”
But, it isn’t certain if the SEC is planning on suing the firm for issuing the stablecoin or just listing it. If it is for the latter, a plethora of cryptocurrency exchanges could be in trouble as they continue to list BUSD.
Just last week, the New York Department of Financial Services [NYDFS] launched an investigation against Paxos. However, the details behind the investigation were quite hazy. It should be noted that Paxos is a Trust Company chartered by the NYDFS.
The SEC’s latest move did not seem to sit well with the community. Noting how BUSD was a stablecoin several noted that the SEC was trying to take a shot at Binance.
How BUSD is reacting to the news
Binance USD coin [BUSD] is currently the 7th largest cryptocurrency and the 3rd biggest stablecoin. The asset has a market cap of $16.15 billion. It looks like BUSD managed to stay true to its reputation of being a stablecoin. Several minor fluctuations occurred throughout the day, but BUSD did not plummet below $0.9995. At press time, the asset was trading for $0.9999.