BUSD Probe of Paxos Planned by SEC
The US SEC (Securities and Exchange Commission) is looking to file a lawsuit against crypto firm Paxos. Regulators have notified the firm that it is infringing on investor protection laws. The Wall Street Journal said that the lawsuit relates to one of Paxos’ stablecoins, Binance USD (BUSD).
The SEC believes that the stablecoin issuer has not registered its BUSD token as a security. It may be misleading for the investors and comes under violation of laws.
SEC served Paxos a Wells Notice over BUSD
The financial watchdog has also served the stablecoin firm with a Wells Notice. The regulators serve this notice to warn that they may take enforcement action against the firm.
After receiving the letter, firms usually have to respond within 30 days with a Wells Submission. The submission is a legal brief in which defendants can provide a counterargument. If the argument is valid, the charges can be dropped.
In the Binance USD case, it would be interesting to see how Paxos responds to the Wells Notice.
What’s Binance's stance on the matter?
Cointelegraph reported that a spokesperson from Binance shared their views on the matter. The spokesperson says that “Paxos issued and owned" the BUSD token with Binance licensing. In addition, they said that the token is authorised and regulated by the Financial Services Department of New York. The token is registered as a "1 to 1 backed stablecoin".
The representative said that stablecoins offer various use cases for investors by protecting them from volatility. They also believed that a lawsuit against BUSD would restrict millions of investors from accessing it. However, the spokesperson assured that Binance is currently closely monitoring the situation.
SEC recently released its annual plan for crypto regularisation in the US. It also charged the Kraken exchange for offering securities. This means the SEC is looking to intensify its operations for crypto enforcement.
Author: Wasay Ali
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