SEC to File Lawsuit Against Paxos for Issuing Binance USD

• As per reports, the SEC sent out a letter to Paxos.
• According to the SEC, BUSD is an unregistered security.

The U.S. Securities and Exchange Commission (SEC) intends to file a suit against Paxos, the firm that developed the Binance USD (BUSD) and Pax Dollar (USDP) tokens, over the latter stablecoin. The SEC allegedly wrote to Paxos. The regulator alerted Paxos to “possible enforcement action” in the letter.

BUSD is a stablecoin with the Binance brand. It was developed by Paxos, a trust organization under New York law that also holds a provisional charter from the federal bank regulator Office of the Comptroller of the Currency. The Paxos Dollar (USDP) stablecoin, which was introduced in 2018. It was also developed by Paxos, as was the digital asset exchange itBit, which was introduced in 2012 at the same time as Paxos.

According to the SEC, BUSD is an unregistered security. Since the firm “violated investor protection laws,” the regulator is suing the company.  The New York Department of Financial Services [NYDFS] only just started looking into Paxos last week. 

SEC Stepping up Its Crypto Enforcement

The SEC has stepped up its crypto enforcement against important market players. The cryptocurrency exchange Kraken and the regulator agreed to a $30 million settlement on February 9 for the firm’s failure to register its crypto staking program, which the SEC claimed was security. Gary Gensler, the chairman of the SEC, issued a warning to cryptocurrency firms after the incident. And advised them to come in and follow the law. 

Numerous digital tokens have faced enforcement action from the SEC during the last six years. The agency said that those assets fell within the category of investments that require SEC registration before being offered for sale to the general public.