SEC Plans To Sue Paxos For Listing Binance USD Stablecoin As An Unregistered Security

Key Points:

• According to the Wall Street Journal, citing unidentified sources, the SEC intends to sue Paxos for listing the BUSD stablecoin, claiming it is unregistered security.
• According to Binance, BUSD is issued and owned by Paxos, and the company just licenses its trademark.

According to the Wall Street Journal, the Securities and Exchange Commission aims to sue Paxos for listing the Binance USD coin, claiming it is an unregistered security.

As WSJ reported, the SEC’s enforcement staff sent Paxos a letter known as a Wells notice, which the agency uses to notify corporations and individuals of a potential enforcement action. The notice alleges that Binance USD, a digital asset that Paxos issues and lists, is unregistered security.

The SEC has increased crypto enforcement against big market participants. Payward Inc.’s Kraken platform agreed last week to stop offering crypto staking services in the United States and pay $30 million in fines to the SEC. Staking enables investors to make a return by temporarily transferring their crypto tokens to an intermediary or a cryptocurrency network.

The SEC has never taken enforcement action against a major stablecoin issuer before. However, when the government expanded its special enforcement section devoted to the crypto industry last year, it stated that stablecoins would be a focus.

BUSD is a Binance-branded stablecoin that is tied to the US dollar one-to-one. Binance and Paxos announced a collaboration to deploy it in 2019. BUSD is also listed on itBit, a digital asset exchange owned by Paxos. BUSD is also available on a number of other exchanges.

According to Binance, BUSD is issued and owned by Paxos, and the company just licenses its trademark.

We will continue to monitor the situation

Binance said

Over the last six years, the SEC has pursued enforcement action against dozens of digital tokens. According to the agency, those assets were the type of investments that needed to be registered with the SEC before selling them to the public.

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