SEC Claims Binance Stablecoin (BUSD) Is A Security & Sues Issuer Paxos
SEC Claims Binance Stablecoin (BUSD) Is A Security & Sues Issuer Paxos.
The U.S. Securities and Exchange Commission (SEC) has reportedly told the issuer of Binance-branded stablecoin BUSD, Paxos, that they intend to sue the issuer for violation of investor protection laws.
SEC’s Claims on Binance BUSD Issuer Paxos
According to a report in The Wall Street Journal on Feb. 12, the SEC has issued a Wells Notice to Paxos alleging that BUSD is an unregistered security, requiring Paxos to stop creating more of its BUSD token.
Related: Coinbase CEO Talks Rumours Of SEC Wanting To Ban Crypto Staking!
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.
No one has ever had “the expectation of profit” when buying $BUSD. pic.twitter.com/QXOlDUyvc3
— Miles Deutscher (@milesdeutscher) February 13, 2023
A Binance spokesperson has since spoken out about the situation, explaining that fud around the BUSD shouldn’t affect the number one crypto exchange as BUSD itself is a “Paxos-issued and owned product.”
“Stablecoins are a critical safety net for investors seeking refuge from volatile markets and limiting their access would directly harm millions of people across the globe. We will continue to monitor the situation. Our global users have a wide array of stablecoins available to them.” The Binance representative said.
CZ Responds
Binance CEO Changpeng Zhao (CZ) has also recently tweeted about the situation, confirming that Paxos had indeed been instructed by the New York Department of Financial Services (NYDFS) to cease the minting of BUSD, but that Paxos “will continue to service the product, and manage redemptions.”
CZ also goes on to talk about his personal disagreement with how the SEC had labeled the BUSD stablecoin as a security, arguing that if BUSD is found to be a security that “it will have profound impacts on how the crypto industry will develop (or not develop) in the jurisdictions where it is ruled as such.”
“Binance will continue to support BUSD for the foreseeable future. We do foresee users migrating to other stablecoins over time. And we will make product adjustments accordingly. eg, move away from using BUSD as the main pair for trading, etc.” CZ tweeted.
2/ We were informed by Paxos they have been directed to cease minting new BUSD by the New York Department of Financial Services (NYDFS).
Paxos is regulated by NYDFS.
BUSD is a stablecoin wholly owned and managed by Paxos.
— CZ 🔶 Binance (@cz_binance) February 13, 2023
Related: Kraken To Shut Down Crypto Staking Following $30M Fine By SEC
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