• Paxos Trust Company is in ongoing discussions with the US Securities and Exchange Commission (SEC) concerning Binance stablecoin BUSD.
• The firm received a Wells notice from the American regulator alleging that it was selling unregistered securities, indicating that the Binance-branded BUSD was a security.
• The New York Department of Financial Services (NYDFS) also ordered Paxos to stop issuing the Binance stablecoin from Feb. 21, 2022.
Paxos Talks With US SEC Over Binance Stablecoin
Paxos Trust Company, a major blockchain infrastructure platform, is holding discussions with the US Securities and Exchange Commission (SEC) concerning Binance stablecoin BUSD, according to a report by Reuters. Charles Cascarilla, CEO of Paxos, sent an email to the firm’s employees on Feb. 18 informing them about the talks with the SEC.
Wells Notice Alleges Unregistered Securities
Earlier in February, Paxos received a Wells notice from the American regulator alleging that it was selling unregistered securities, indicating that the Binance-branded BUSD was a security. Cascarilla further said Paxos was looking to continue its discussions with the Securities and Exchange Commission privately if necessary.
NYDFS Orders Cease Issuing of Stablecoin
The New York Department of Financial Services (NYDFS) also ordered Paxos to stop issuing the Binance stablecoin from Feb. 21, 2022 with plans to support them until 2024. The US securities watchdog has been on the hunt for different cryptocurrency services it believes could be unregistered securities such as Kraken’s staking services which were recently delisted by Coinbase Pro due to regulatory concerns over their legitimacy as digital assets under US law.
Binance Responds To Court Order
In response to NYDFS‘ court order requiring Paxos to cease minting its tokenized dollar product tied to fiat currency held at financial institutions regulated by federal agencies or states within America, Changpeng Zhao (CZ), CEO of leading crypto exchange platform Binace wrote: „We will continue our efforts in compliance and innovation.“
The ongoing conversations between Paxo Trust Company and SEC are set to go on behind closed doors for now until there is an agreement reached between both parties regarding the allegations made against PAXOS for allegedly selling unregistered securities tied to its USD backed stable coin -BUSD- issued in collaboration with leading crypto exchange platform -BINANCE-.
• Circle alerted the NYDFS about Binance’s mismanagement of reserves for its tokens.
• Circle warned them months before the NYDFS‘ announcement of Paxos ending its relationship with Binance surrounding BUSD.
• Binance acknowledged times when it did not fully back its BUSD and Circle’s warning claimed that USDC was also undercollateralized by Binance at times.
Circle Alerts NYDFS About Binance Reserves
Circle – the issuer of the world’s second-largest stablecoin, USDC – reportedly warned the New York Department of Financial Services (NYDFS) last Autumn that Binance has been mismanaging its token reserves.
What Did Circle Warn About?
Circle alerted the NYDFS to blockchain-based signs that Binance did not hold enough crypto in its reserves to support the tokens it had issued to customers. These tokens include its Binance-peg Bitcoin, Ether, USDC, BUSD, and other derivative coins designed to be circulated on Binance’s own network, BNB Smart Chain.
BUSD Not Fully Backed
Binance may not necessarily deny such claims: in January, it acknowledged that there were times when its Binance-peg BUSD was not fully backed, with as much as $1 billion missing from its reserves.
USDC Undercollateralized By Binance
Circle’s warning claimed that USDC was also undercollateralized by Binance at times. According to the source contacted by Bloomberg, B
• FTX Group is requesting the return of donations from politicians who have benefitted from the company’s funds.
• The debtors are sending confidential letters to political figures and action funds who received payments from FTX, Samuel Bankman-Fried, or other officers of the company.
• If these parties do not voluntarily repay the money by February 28th, 2023, then legal action may be taken against them with accrued interest on what they owe.
FTX Requests Return of Donations
FTX Group is asking for its money back after donating tens of millions of dollars to politicians throughout the 2022 midterm election cycle. Recipients of these contributions must return the funds by February 28th, 2023 or face legal action taken by the Bankruptcy Court with interest accruing on what they owe. It is estimated that up to $93 million in total may be returned to FTX if all related parties comply with this request.
At least 196 members of Congress have been identified as having received donations from exchange giant FTX, including House Speaker Kevin McCarthy (R-Calif) and Senate Majority leader Chuck Schumer (D-NY). These donations were made at the direction of FTX Debtors such as Sam Bankman-Fried and other officers or principals associated with the company.
The process was announced in December when FTX established arrangements for recipients to voluntarily return their money. A press release on Sunday stated that confidential letters were being sent out to those affected asking them to comply with this request before facing possible legal action from the Bankruptcy Court if they fail to do so.
Political contributions such as those given by FTX can be used for a variety of purposes including campaign financing and influencing elections through support for certain candidates or causes. In this case, it appears that many high-profile political figures were supported financially by Sam Bankman-Fried’s former company prior to its bankruptcy filing last year.
After receiving hefty donations from now bankrupt exchange giant FTX during last year’s midterm election cycle, politicians are now being asked to return those funds before February 28th or face potential legal action taken against them by the Bankruptcy Court with interest accruing on what they owe.