BREAKING: SEC To Sue Paxos Over Binance Stablecoin• February 13, 2023 4:57 pm • Comments
It looks like the SEC is continuing to go with its agenda of regulating the crypto industry through litigation which has caused a lot of concerns for investors.
Just recently, the agency has revealed that it will be suing the stable coin issuer Paxos because of the Binance USD stable coin (BUSD).
The reason for this is because the SEC is accusing the BUSD stable coin to be an unregistered security which is the same accusation that the SEC had for XRP.
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The fact that the SEC intends to do this is quite surprising given the fact that Paxos is a New York regulated trust company which means it satisfies most of the regulations when it comes to digital assets.
Still, it looks like even the highest precautions can still get you in trouble with the SEC which makes the crypto industry vulnerable to sudden lawsuits.
— Eleanor Terrett (@EleanorTerrett) February 13, 2023
Following the news of SEC’s intentions, Paxos said it would halting the minting of new BUSD tokens.
A Binance spokesperson told CoinDesk: “BUSD is a stablecoin wholly owned and managed by Paxos.
As a result, BUSD market cap will only decrease over time. Paxos will continue to service the product, manage redemptions, and will follow-up with additional information as required. Paxos also assured the funds are safe, and fully covered by reserves in their banks.
“Given the ongoing regulatory uncertainty in certain markets, we will be reviewing other projects in those jurisdictions to ensure our users are insulated from further undue harm.”
Sunday’s news comes right after the SEC settled charges with crypto exchange Kraken, when the regulator alleged its staking services were an offering of unregistered securities. Kraken did not admit or deny the charges under the terms of the settlement, but did shut down all of its U.S. staking programs.
This may also be one of the first times that the SEC is accusing a stable coin to be an unregistered security given the fact that stable coins do not fluctuate in price.
Therefore, it is less likely that the asset would be used for purposes such as profiting or other reasons.
At the moment, BUSD is considered the third largest stable coin which means that it has a very significant impact on the crypto industry.
Also, the stable coin was launched back in 2018 so it is strange that the SEC would decide to go after it now given that it has been 4 years after its launch.
This latest news comes during a time when the SEC has been doing a lot of litigation activity for various reasons which indicates that the SEC intends to be a full-time regulator for the industry.
The SEC has labelled BUSD as an “unregistered security”, and is suing its issuer, Paxos.
But how on earth is a STABLECOIN considered a security, when it clearly doesn’t meet the Howey Test criteria.
— Miles Deutscher (@milesdeutscher) February 13, 2023
Paxos is also the creator of the Paxos Dollar (USDP) stablecoin, which was launched in 2018, and is also behind digital asset exchange itBit, which it launched in 2012 alongside the founding of Paxos.
FOX Business journalist Eleanor Terrett tweeted on Feb. 12 that the move was a “unilateral effort” from the SEC and other regulators to “blitz crypto.” She claimed that more Wells notices are expected to be sent over the coming weeks.
The SEC faced criticism from its own people for its action against Kraken. On Feb. 10 SEC Commissioner Hester Peirce said the SEC’s conduct “is not an efficient or fair way of regulating,” slamming her own agency for shutting down a “program that has served people well.”
Reports also emerged last week that Paxos was being investigated by the NYDFS. However, the exact motive behind the probe is currently unclear.
— Bitcoin News (@BTCTN) February 13, 2023
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