According to The Wall Street Journal, the notice relates to Binance USD, which the United States Securities and Exchange Commission is alleging is unregistered security.
The US Securities and Exchange Commission reported telling Paxos Trust Co. that he plans to sue the stablecoin offering for violating the investor protection laws regarding Binance USD BUSD ($1.00) sign.
As per a Feb. 12 report from The Wall Street Journal citing people familiar with the matter, the SEC gave Wells a Paxos notice – a letter used by the regulator to notify companies of enforcement plans.
The statement says that Binance USD is an unregistered security, according to the people. According to Investopedia, after receiving Wells’ notice, the defendant has 30 days to respond with a legal brief known as a Wells Submission, an opportunity to argue why charges should not be brought against the potential defendants. . .
An SEC spokesperson told Cointelegraph that it “does not comment on the existence or non-existence of a possible investigation.”
A Binance spokesperson said that BUSD is “a licensed and owned product of Paxos,” with Binance licensing the company for BUSD. The spokesperson added that Paxos is regulated by the New York Department of Financial Services and BUSD is a “1 to 1 approved stablecoin.”
“Stablecoins are an important security for investors looking for a safe haven from volatile markets and limiting access to them will hurt millions of people around the world,” said a Binance representative. “We will continue to monitor the situation. Our global users have many stablecoins.
Cointelegraph contacted Paxos for comment but did not immediately receive a response.
Paxos is the owner and issuer of BUSD, a US dollar-denominated coin that has been around since the company entered into a partnership with Binance in September 2019. It is the third most stable coin, with a current market capitalization of over $16 billion.
Paxos is also the creator of the stablecoin Paxos Dollar (USDP), which was launched in 2018, and is also behind the digital exchange itBit, which it launched in 2012 alongside the foundation of Paxos. . FOX business reporter Eleanor Terrett tweeted on Feb. He said more Wells notices are expected to be sent in the next few weeks. The reported incident is the latest move by the SEC to shed light on crypto-related transactions.
On Feb. On January 9, the regulator announced a $30 million settlement with crypto exchange Kraken for its failure to register its crypto staking program that the SEC said was security. Following the action, SEC chairman Gary Gensler warned crypto companies to “come and obey the law.”
The SEC criticized its own people for its actions against Kraken. On February 10, SEC Commissioner Hester Peirce said that the SEC’s actions were “not an effective or fair way to regulate,” blaming her own company for shutting down “programs that serve people”.
News also emerged last week that Paxos was being investigated by the NYDFS. However, the exact motive behind the investigation is currently unknown.
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