According to reports on Feb. 12 citing ‘people familiar with the matter,’ the SEC plans to take action against Paxos over the Binance stablecoin, BUSD.
The WSJ report stated that the financial regulator issued a letter to Paxos, known as a Wells notice, to inform it of possible enforcement action. The Wells notice enables companies to respond to the SEC to explain why the agency shouldn’t proceed with legal action. It is not a final declaration of enforcement action.
The SEC is making the same allegations that it always does with crypto companies – selling unregistered securities, which it asserts BUSD is. Furthermore, the agency has yet to target a large stablecoin issuer but is broadening its scope with this latest salvo.
Is BUSD a Security?
Paxos partnered with Binance in 2019 to launch the dollar-pegged exchange-branded stablecoin, which is now the world’s third-largest.
The crypto community suggested that it was a swipe at Binance since the asset is obviously a stablecoin, not a security.
