According to the Wall Street Journal, the U.S. Securities and Exchange Commission (ESC) intends to sue Paxos for listing the Binance USD coin, saying that it is an unregistered securities.
According to the WSJ, which cited unnamed sources, the SEC wrote to Paxos, a blockchain and trust startup, warning it of “a prospective enforcement action.” According to the lawsuit, “investor protection laws” were broken.
After receiving a Wells Notice, the accused has 30 days to react by submitting a legal brief called a Wells Submission that offers justifications for why the charges should not be pursued against potential defendants, according to Investopedia.
The action is being taken as U.S. regulators increase their efforts to regulate cryptocurrency businesses in the wake of the well reported collapse of exchange FTX. The SEC recently reached a settlement with another exchange, Kraken, after it was penalized for its “staking-as-a-service scheme.”
BUSD, a stablecoin backed by U.S. dollars, is owned and issued by Paxos. It has existed since the company partnered with cryptocurrency exchange Binance in September 2019. With a market cap that has surpassed $16 billion at this time, it is the third-largest stablecoin.
Additionally, Paxos is the brainchild behind the 2018-launched Paxos Dollar (USDP) stablecoin and the itBit digital asset exchange, both of which were introduced in 2012 in conjunction with the foundation of Paxos.
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