• 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.“
Conclusion
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-.