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US SEC to Sue Crypto Trust Paxos Over Binance Stablecoin BUSD

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Updates: 

  • Paxos will stop issuing the Binance Stablecoin BUSD.
  • Binance CEO Changpeng Zhao said funds remain safe and maintains BUSD should not be under U.S. Securities laws. 

Original article follows:

Paxos, blockchain and trust company, might face a lawsuit filed by the U.S. Securities and Exchange Commission (SEC) for issuing their stable coin Pax Dollar (USDP) and Binance USD (BUSD) tokens.

As reported by the Wall Street Journal, SEC is alleging that BUSD is an unregistered security which is “violating investor protection laws.”

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Binance and Paxos launched BUSD in 2019 and although it is a Binance-branded stablecoin, the exchange is not tied into the issue as the current sole issuer for the token is only Paxos.

Whether the SEC will hold an investigation on the firm, an SEC spokesperson told Coindesk the commission does not comment on its existence or nonexistence. Recently, Coindesk also revealed that Paxos was also being investigated by the New York Department of Financial Services (NYDFS); the reasons for this are still undisclosed. 

Stablecoins are a type of cryptocurrency that is pegged with fiat, or can also be gold, at a 1:1 ratio. It is categorized into three: fiat-backed, crypto-backed and algorithmic. In 2022,  the United States (US) Congress expressed their plan to impose a ban on algorithmic stablecoins following the collapse of Terra’s collapse. (Read more: US Solons Eye to Ban Algorithmic Stablecoins for 2 Years)

Recently,  US SEC settled with cryptocurrency exchange Kraken as it halts its staking program and agreed to pay $30 million in disgorgement, prejudgment interest and civil penalties; following SEC’s charge against the crypto exchange after it failed to register its offer and sale of “crypto asset staking-as-a-service program.” (Read more: Crypto Staking No More: Kraken Settles with US SEC Over Staking Program)

This article is published on BitPinas: US SEC to Sue Crypto Trust Paxos Over Binance Stablecoin BUSD

Disclaimer: BitPinas articles and its external content are not financial advice. The team serves to deliver independent, unbiased news to provide information for Philippine-crypto and beyond.

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