{"id":9625,"date":"2023-02-13T16:51:44","date_gmt":"2023-02-13T15:51:44","guid":{"rendered":"https:\/\/europepublic.com\/sec-to-sue-paxos-over-busd-ordered-to-stop-issuance\/"},"modified":"2023-02-13T16:51:44","modified_gmt":"2023-02-13T15:51:44","slug":"sec-to-sue-paxos-over-busd-ordered-to-stop-issuance","status":"publish","type":"post","link":"https:\/\/europepublic.com\/sec-to-sue-paxos-over-busd-ordered-to-stop-issuance\/","title":{"rendered":"SEC to Sue Paxos Over BUSD, Ordered to Stop Issuance"},"content":{"rendered":"<p> <br \/>\n<br \/><a href=\"https:\/\/dailycoin.com\/sec-to-sue-paxos-over-busd-ordered-to-stop-issuance\/\" target=\"_blank\" rel=\"noopener\"><\/a><\/p>\n<section class=\"wpb-content-wrapper\">\n<div class=\"vc_row wpb_row vc_row-fluid mkd-section mkd-content-aligment-left\">\n<div class=\"clearfix mkd-full-section-inner\">\n<div class=\"wpb_column vc_column_container vc_col-sm-12\">\n<div class=\"vc_column-inner\">\n<div class=\"wpb_wrapper\">\n<div class=\"wpb_text_column wpb_content_element \">\n<div class=\"wpb_wrapper\">\n<ul>\n<li style=\"font-weight: 400\"><b>The SEC has issued a Wells Notice to Paxos, alleging that its BUSD stablecoin is an unregistered security.<\/b><\/li>\n<li style=\"font-weight: 400\"><b>The notice comes after New York regulators ordered Paxos to stop issuing the BUSD.<\/b><\/li>\n<li style=\"font-weight: 400\"><b>The SEC will take legal enforcement action if Paxos continues with the issuance of BUSD.<\/b><\/li>\n<\/ul><\/div>\n<\/p><\/div>\n<div class=\"vc_empty_space\" style=\"height: 21px\"><span class=\"vc_empty_space_inner\"><\/span><\/div>\n<div class=\"wpb_text_column wpb_content_element \">\n<div class=\"wpb_wrapper\">\n<p><span style=\"font-weight: 400\">The US Securities and Exchange Commission (SEC) has reportedly warned Paxos Trust Co. that it could take legal enforcement action against the issuer of Binance USD (BUSD) stablecoin for violating investor protection laws.<\/span><\/p>\n<\/p><\/div>\n<\/p><\/div>\n<div class=\"vc_empty_space\" style=\"height: 21px\"><span class=\"vc_empty_space_inner\"><\/span><\/div>\n<div class=\"wpb_text_column wpb_content_element \">\n<div class=\"wpb_wrapper\">\n<h2><b>The SEC to Take Enforcement Action Against Paxos\u00a0<\/b><\/h2>\n<\/p><\/div>\n<\/p><\/div>\n<div class=\"wpb_text_column wpb_content_element \">\n<div class=\"wpb_wrapper\">\n<p><span style=\"font-weight: 400\">Paxos Trust Co., the issuer of the Binance USD (BUSD), has reportedly received a Wells Notice from the SEC. A Wells notice is a letter issued by the regulator to inform companies of planned enforcement action.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400\">As per the Wall Street Journal report, the SEC alleges that the BUSD is unregistered security. Binance and Paxos partnered to launch the stablecoin pegged to the dollar on a one-to-one ratio in 2019.<\/span><\/p>\n<\/p><\/div>\n<\/p><\/div>\n<div class=\"vc_empty_space\" style=\"height: 21px\"><span class=\"vc_empty_space_inner\"><\/span><\/div>\n<div class=\"wpb_text_column wpb_content_element \">\n<div class=\"wpb_wrapper\">\n<h2><b>Paxos Ordered to Stop Issuing Binance USD<\/b><\/h2>\n<\/p><\/div>\n<\/p><\/div>\n<div class=\"wpb_text_column wpb_content_element \">\n<div class=\"wpb_wrapper\">\n<p><span style=\"font-weight: 400\">Shortly after the SEC issued a wells notice to Paxos Trust, the New York Department of Financial Services (NYDFS) reportedly ordered the blockchain company to stop the issuance of the BUSD stablecoin.<\/span><\/p>\n<p><span style=\"font-weight: 400\">The New York Regulator also ordered Paxos to stop creating more of its BUSD token. However, the stablecoin issuer will continue to manage redemptions of the BUSD amidst the barrage of regulatory actions.<\/span><\/p>\n<p><span style=\"font-weight: 400\">According to a Binance statement, the BUSD is &#8220;wholly owned and managed by Paxos.&#8221; Given the regulatory uncertainty, Binance will review &#8220;other projects in those jurisdictions to ensure our users are insulated from further undue harm.&#8221;<\/span><\/p>\n<\/p><\/div>\n<\/p><\/div>\n<div class=\"vc_empty_space\" style=\"height: 21px\"><span class=\"vc_empty_space_inner\"><\/span><\/div>\n<div class=\"wpb_text_column wpb_content_element \">\n<div class=\"wpb_wrapper\">\n<h2><b>Is the BUSD a Security?<\/b><\/h2>\n<\/p><\/div>\n<\/p><\/div>\n<div class=\"wpb_text_column wpb_content_element \">\n<div class=\"wpb_wrapper\">\n<p><span style=\"font-weight: 400\">The SEC has been using the Howey Test to determine whether a crypto should be classified as a security. The Howey Test classifies an asset as a security if there is an investment of money with the expectation of profits derived from the efforts of others.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Business development and marketing executive Adam Cochran has <\/span><a href=\"https:\/\/twitter.com\/adamscochran\/status\/1624947461646163973\" data-wpel-link=\"external\" target=\"_blank\" rel=\"follow external noopener\"><span style=\"font-weight: 400\">argued<\/span><\/a><span style=\"font-weight: 400\"> that anything can be called a security due to the vagueness of the definition. He <\/span><a href=\"https:\/\/twitter.com\/adamscochran\/status\/1624947471259430915\" data-wpel-link=\"external\" target=\"_blank\" rel=\"follow external noopener\"><span style=\"font-weight: 400\">writes<\/span><\/a><span style=\"font-weight: 400\">:<\/span><\/p>\n<\/p><\/div>\n<\/p><\/div>\n<div class=\"wpb_raw_code wpb_content_element wpb_raw_html\">\n<div class=\"wpb_wrapper\">\n\t\t\t.tweet-container,.twitter-tweet.twitter-tweet-rendered,blockquote.twitter-tweet{min-height:261px}.tweet-container{position:relative}blockquote.twitter-tweet{display:flex;max-width:550px;margin-top:10px;margin-bottom:10px}blockquote.twitter-tweet p{font:20px -apple-system,BlinkMacSystemFont,&#8221;Segoe UI&#8221;,Helvetica,Arial,sans-serif}.tweet-container div:first-child{<br \/>\n        position:absolute!Important<br \/>\n    }.tweet-container div:last-child{<br \/>\n        position:relative!Important<br \/>\n    }<\/p>\n<div class=\"tweet-container\">\n<blockquote class=\"twitter-tweet\">\n<p lang=\"en\" dir=\"ltr\">4\/5<\/p>\n<p>The fact that these assets hold underlying treasuries, makes them a lot like a money market fund, exposing holders to a security, even if they don&#039;t earn from it.<\/p>\n<p>Making an argument (not one I agree with, but a reasonable enough one) that they can be a security.<\/p>\n<p>&mdash; Adam Cochran (adamscochran.eth) (@adamscochran) <a href=\"https:\/\/twitter.com\/adamscochran\/status\/1624947471259430915?ref_src=twsrc%5Etfw\" data-wpel-link=\"external\" target=\"_blank\" rel=\"follow external noopener\">February 13, 2023<\/a><\/p><\/blockquote>\n<\/div>\n<p>function lazyTwitter(){var i=function(t){if(!t)return;var n=t.getBoundingClientRect();return 2500&gt;n.top||-2500&gt;n.top};if(!i(document.querySelector(&#8220;.twitter-tweet&#8221;)))return;var s=document.createElement(&#8220;script&#8221;);s.onload=function(){};s.src=&#8221;\/\/platform.twitter.com\/widgets.js&#8221;;document.head.appendChild(s);document.removeEventListener(&#8220;scroll&#8221;,lazyTwitter);document.removeEventListener(&#8220;touchstart&#8221;,lazyTwitter);console.log(&#8220;load twitter widget&#8221;)}document.addEventListener(&#8220;scroll&#8221;,lazyTwitter);document.addEventListener(&#8220;touchstart&#8221;,lazyTwitter);lazyTwitter()<\/p><\/div>\n<\/p><\/div>\n<div class=\"vc_empty_space\" style=\"height: 21px\"><span class=\"vc_empty_space_inner\"><\/span><\/div>\n<div class=\"wpb_text_column wpb_content_element \">\n<div class=\"wpb_wrapper\">\n<p><span style=\"font-weight: 400\">He also explains that the Howey Test is not the only way to determine if an asset qualifies as a security. However, there is a general call for clearer guidelines in determining what can be called a security.<\/span><\/p>\n<\/p><\/div>\n<\/p><\/div>\n<div class=\"vc_empty_space\" style=\"height: 21px\"><span class=\"vc_empty_space_inner\"><\/span><\/div>\n<div class=\"wpb_text_column wpb_content_element \">\n<div class=\"wpb_wrapper\">\n<h2><b>The SEC Seeks More Control Over the Crypto Industry<\/b><\/h2>\n<\/p><\/div>\n<\/p><\/div>\n<div class=\"wpb_text_column wpb_content_element \">\n<div class=\"wpb_wrapper\">\n<p><span style=\"font-weight: 400\">The Paxos Wells Notice right comes just after the SEC settled charges with crypto exchange Kraken, in a case where the regulator alleged Kraken&#8217;s staking services were an offering of unregistered securities.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400\">The SEC has been looking to tighten its reins on the nascent crypto industry, mainly through enforcement. In 2022, the regulator filed 41 lawsuits against crypto exchanges and related firms &#8211; the most in a calendar year.<\/span><\/p>\n<\/p><\/div>\n<\/p><\/div>\n<div class=\"vc_empty_space\" style=\"height: 21px\"><span class=\"vc_empty_space_inner\"><\/span><\/div>\n<div class=\"wpb_text_column wpb_content_element \">\n<div class=\"wpb_wrapper\">\n<h2>On the Flipside<\/h2>\n<\/p><\/div>\n<\/p><\/div>\n<div class=\"wpb_text_column wpb_content_element \">\n<div class=\"wpb_wrapper\">\n<ul>\n<li><b>Paxos has assured users that their funds are safe and fully covered by reserves in their banks and will follow up with additional information as required.<\/b><\/li>\n<\/ul><\/div>\n<\/p><\/div>\n<div class=\"vc_empty_space\" style=\"height: 21px\"><span class=\"vc_empty_space_inner\"><\/span><\/div>\n<div class=\"wpb_text_column wpb_content_element \">\n<div class=\"wpb_wrapper\">\n<h2>Why You Should Care<\/h2>\n<\/p><\/div>\n<\/p><\/div>\n<div class=\"wpb_text_column wpb_content_element \">\n<div class=\"wpb_wrapper\">\n<p><span style=\"font-weight: 400\">The order to stop issuing new BUSD will mean that the market cap of the stablecoin will only reduce over time as redemptions increase.<\/span><\/p>\n<\/p><\/div>\n<\/p><\/div>\n<div class=\"vc_empty_space\" style=\"height: 41px\"><span class=\"vc_empty_space_inner\"><\/span><\/div>\n<div class=\"wpb_text_column wpb_content_element \">\n<div class=\"wpb_wrapper\">\n<p><b>Read more about the NYDFS investigation below:<br \/>\n<\/b><em><a href=\"https:\/\/dailycoin.com\/new-york-regulators-launch-invesigation-into-stablecoin-issuer-paxos\/\" data-wpel-link=\"internal\" target=\"_blank\" rel=\"noopener\">New York Regulators Launch Investigation into Stablecoin Issuer Paxos<\/a><\/em><\/p>\n<p><b>The SEC settlement with Kraken is covered in:<br \/>\n<\/b><em><a href=\"https:\/\/dailycoin.com\/kraken-pays-30-million-fine-and-shuts-down-staking-service-in-sec-settlement\/\" data-wpel-link=\"internal\" target=\"_blank\" rel=\"noopener\">Kraken Pays $30 Million Fine and Shuts Down Staking Service in SEC Settlement, the Crypto Mom Reacts <\/a><\/em><\/p>\n<\/p><\/div>\n<\/p><\/div>\n<div class=\"vc_empty_space\" style=\"height: 41px\"><span class=\"vc_empty_space_inner\"><\/span><\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/section>\n<p><br \/>\n<br \/><a href=\"https:\/\/dailycoin.com\/sec-to-sue-paxos-over-busd-ordered-to-stop-issuance\/\" target=\"_blank\" rel=\"noopener\">Source link: https:\/\/dailycoin.com\/sec-to-sue-paxos-over-busd-ordered-to-stop-issuance\/  <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The SEC has issued a Wells Notice to Paxos, alleging that its BUSD stablecoin is an unregistered security. The notice comes after New York regulators ordered Paxos to stop issuing the BUSD. The SEC will take legal enforcement action if Paxos continues with the issuance of BUSD. The US Securities and Exchange Commission (SEC) has [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":9626,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[25],"tags":[120,15321,118,119,117,15322,121,9157,15003,5968,3032,3282],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"https:\/\/i0.wp.com\/dailycoin.com\/wp-content\/uploads\/2023\/02\/Paxos_Over-Binance-USD-Token-BUSD_sued_sad_facepalm_coins_social.jpg?fit=%2C&ssl=1","_links":{"self":[{"href":"https:\/\/europepublic.com\/wp-json\/wp\/v2\/posts\/9625"}],"collection":[{"href":"https:\/\/europepublic.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/europepublic.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/europepublic.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/europepublic.com\/wp-json\/wp\/v2\/comments?post=9625"}],"version-history":[{"count":0,"href":"https:\/\/europepublic.com\/wp-json\/wp\/v2\/posts\/9625\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/europepublic.com\/wp-json\/wp\/v2\/media\/9626"}],"wp:attachment":[{"href":"https:\/\/europepublic.com\/wp-json\/wp\/v2\/media?parent=9625"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/europepublic.com\/wp-json\/wp\/v2\/categories?post=9625"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/europepublic.com\/wp-json\/wp\/v2\/tags?post=9625"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}