It turns out that Paxos, an altcoin company, has come under the focus of the US Securities and Exchange Commission (SEC). According to the Wall Street Journal report, the SEC is suing Paxos, which issues Binance USD (BUSD) stablecoins from Binance, the world’s largest cryptocurrency exchange by daily trading volume. Here are the details…
SEC alert for altcoin project
The US Securities and Exchange Commission (SEC) plans to sue Paxos, the stablecoin issuer behind the Pax Dollar (USDP) and Binance USD (BUSD) tokens, over the BUSD stablecoin, the Wall Street Journal reported. An SEC spokesperson said the commission did not comment on the existence or absence of a possible investigation. According to the report, the SEC claims that BUSD is an unregistered security. The news comes days after the report said Paxos is under investigation by the New York Department of Financial Services.
However, as we have reported as Kriptokoin.com, the scope of NYDFS’ investigation is unclear. Upon Wells notices, Binance may issue a response to the SEC explaining why it should not proceed with the case. The Wells notices are not the final indication that the SEC will take action. To authorize this sanctions agreement, five officials of the agency must vote. So far, the SEC has not taken any major action against the top stablecoin issuers in the market. However, the agency is increasing its scrutiny on the market with each passing day.
BUSD is a Binance-branded stablecoin issued by Paxos, a New York-regulated trust company that also has a temporary statute from the Office of the Comptroller of the Currency (OCC), a federal bank regulator. Binance clarified its market position, saying: “BUSD is one of the most transparent stablecoins in existence and a 1:1 backed stablecoin.”
SEC scrutinized staking services
This latest news comes just after the SEC settled the charges with crypto exchange Kraken, and the regulator claimed that their staking service is an unregistered securities offering. Kraken has not admitted or denied charges under the settlement terms, but has shut down all staking programs in the US. Binance acknowledged last month that it has not always maintained the appropriate balance to support Binance-Peg BUSD (PBUSD), a wrapped version of BUSD powered by BUSD and offered on non-Ethereum networks.
“In some cases in the past, there was a timing mismatch when Binance-Peg was backing BUSD with BUSD,” Binance said after Bloomberg reported that there were issues with how support for PBUSD was shown. The crypto exchange claimed in a blog post that while there were problems with “publicly visible data,” user payments were unaffected.
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