According to the Wall Street Journal on Sunday, the U.S. Securities and Exchange Commission (SEC) plans to file a lawsuit against Paxos, the company that created the Binance USD (BUSD) and Pax Dollar (USDP) tokens, over the latter stablecoin.
According to an SEC spokeswoman who talked to Coinesk, the agency won’t comment on whether or not there may be an inquiry.
Lawsuit against Paxos
The SEC, according to the article, claims that BUSD is unregistered security. The information was released a few days after CoinDesk said that Paxos was the subject of an inquiry by the New York Department of Financial Services (NYDFS), however, it is not known how extensive that probe is.
The Paxos trust corporation, which is governed by New York law and has a provisional charter from the Office of the Comptroller of the Currency, a federal bank regulator, is the issuer of BUSD, a stablecoin with the Binance brand.
- The U.S. Securities and Exchange Commission (SEC) plans to file a lawsuit against Paxos.
- The Paxos trust corporation has a provisional charter from the Office of the Comptroller of the Currency
- Kraken did not accept or reject the allegations, but it did end all of its U.S. staking initiatives.
Requests for a response from Paxos spokespersons were not immediately responded to. The revelation on Sunday comes just after the SEC and cryptocurrency exchange Kraken reached a settlement over allegations that the latter’s staking services constituted an issuance of unregistered securities.
According to the terms of the deal, Kraken did not accept or reject the allegations, but it did end all of its U.S. staking initiatives.
Last month, Binance admitted that it has not always kept enough funds in reserve to support Binance-Peg BUSD (PBUSD), a wrapped form of BUSD that is available on non-Ethereum networks and is backed by BUSD.
Binance stated that “on occasion in the past, there was a time mismatch in supporting Binance-Peg BUSD with BUSD” in response to Bloomberg’s claim that there were problems with how PBUSD’s backing was shown.
In a blog post, the cryptocurrency exchange asserted that, despite problems with “the publicly available data,” user redemptions were unaffected.
