The US Securities and Exchange Commission (SEC) has accused stablecoin issuer Paxos Trust Co. in violation of the US Investor Protection Act. This publication reported The Wall Street Journal.
The SEC has issued a special notice (the Wells Notice) to Paxos, which the regulator is using to inform companies of planned enforcement action. Sources claim that the Binance USD stablecoin is called an unregistered security in the document.
Upon receipt of the Wells notice, the company has 30 days to respond with a legal brief (Welles’s submission) that includes arguments proving why no charges should be brought in this case.
A Binance spokesperson, in response to an inquiry from Cointelegraph, stated that BUSD is “a product issued and owned by Paxos”, and Binance has only issued a license for use in promoting BUSD. He also added that Paxos is regulated by the New York City Department of Financial Services (NYDFS) and that BUSD is a “1 to 1 backed stablecoin”: harm to millions of people around the world. We will continue to monitor the situation. Our global users have a wide variety of stablecoins available.”
Last week ended with popular crypto exchange Kraken settling its issues with the SEC by agreeing to pay a fine and ban crypto staking on its platform. Such crusades should push other cryptocurrency exchanges on their own, on their own initiative, to turn to the SEC for blessings, as the agency has always advised. In response to the SEC’s aggressive actions on Kraken and staking, Bitcoin fell to $21,500.
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