Paxos said it will engage with the U.S. securities regulator on the matter and is prepared to “vigorously litigate if necessary.”
Paxos Trust says it “strongly disagrees” with the US regulator’s interpretation of Binance USD BUSD ($1.00) such as security.
On February 13, the issuer of BUSD confirmed the recent reports that it received a Wells notice from the United States Securities and Exchange Commission regarding BUSD and its alleged failure to register the offering under the Federal Security Law.
“Paxos disagrees with the SEC officials because BUSD is not a security under federal securities laws,” Paxos said. The company said it received the notice on Feb. 3, adding that “there are no other undisputed charges against Paxos.”
“We will cooperate with SEC officials on this matter and are ready to pursue a strong case if necessary,” he added. On February 13, the New York Department of Financial Services (NYDFS) ordered Paxos to suspend the issuance of BUSD. Paxos said it would comply, tweeting on Feb. 13, and will stop producing new BUSD tokens effective February 1. 21.
However, Paxos has said that BUSD will continue to be supported and will be redeemable for onboard customers until at least February 2024. “New and existing Paxos customers will be able to convert their funds into US dollars or convert their BUSD tokens to Pax Dollars (USDP), backed by Paxos Trust and backed by US dollars,” Paxos said.
The New York State Department of Financial Services, or NYDFS, has reportedly received a complaint from stablecoin issuer Circle regarding Binance’s security before its BUSD split. Binance CEO Changpeng “CZ” Zhao said that the exchange will continue to support BUSD despite the order from issuer Paxos to stop creating the stablecoin by the US SEC and New York regulators.
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