The U.S. Securities and Exchange Commission (SEC) is reportedly planning to sue Paxos, the stablecoin issuer behind the Pax Dollar (USDP) and Binance USD (BUSD). However, the SEC has declined to comment on the matter.
Allegations of Unregistered Security
According to the reports, the SEC is alleging that BUSD is an unregistered security and that Paxos is violating investor protection laws by issuing it. The news comes just days after Paxos came under investigation by the New York Department of Financial Services (NYDFS) for reasons that are unclear.
BUSD is a Binance-branded stablecoin issued by Paxos, which is a New York-regulated trust company with a provisional charter from the Office of the Comptroller of the Currency.
The news comes after the SEC settled charges with crypto exchange Kraken, alleging that its staking services were an offering of unregistered securities. Kraken shut down all its U.S. staking programs without admitting or denying the charges.
The SEC’s latest move has not gone down well with the community, with many noting that the regulator is trying to take a shot at Binance. Binance USD is currently the 7th largest cryptocurrency and the 3rd biggest stablecoin, with a market cap of $16.1 billion.
Binance Acknowledges Issues with PBUSD
Last month, Binance acknowledged that it had not always maintained the proper balance to back Binance-Peg BUSD (PBUSD). After Bloomberg reported issues with PBUSD’s backing, Binance claimed that while there were issues with the publicly viewable data, user redemptions were not affected.
The SEC’s plans to sue Paxos over BUSD has caused a stir in the community, with many speculating about the regulator’s intentions. The outcome of the case will likely have a significant impact on the crypto industry and how stablecoins are regulated in the future.
