According to reports, the United States Securities and Exchange Commission (SEC) has informed stablecoin issuer Paxos Trust Co. that it intends to sue the company for breach of investor protection laws relating to Binance USD.
According to the sources, the SEC’s enforcement team sent Paxos a letter known as a Wells notice, which the agency uses to alert corporations and individuals of a prospective enforcement action. After receiving a Wells Notice, the accused has 30 days to react with a legal brief called a Wells Submission, which comprises points demonstrating why the charges should not be pursued against potential defendants.
Stablecoins are a critical safety net for investors seeking refuge from volatile markets and limiting their access would directly harm millions of people across the globe. We will continue to monitor the situation. Our global users have a wide array of stablecoins available to them.
Binance Spokesperson said
In September 2019, Paxos formed a strategic relationship with cryptocurrency exchange Binance, and as a result, Paxos became the owner and issuer of BUSD, a stablecoin backed by the U.S. dollar. It has a market capitalization of about $16 billion, making it the third biggest stablecoin. When Paxos was founded in 2012, it also established itBit, a digital asset exchange, and created the Paxos Dollar (USDP), a stablecoin.
In recent months, the SEC has ramped up its crypto enforcement efforts, particularly targeting high-volume players. Kraken, a platform owned by Payward Inc., agreed last week to pay $30 million in fines to the SEC and cease operating cryptocurrency staking services inside the United States. By temporarily transferring ownership of their cryptocurrency tokens to an intermediary or the network itself, investors may participate in a yield-generating process known as staking.
When it comes to big stablecoin issuers, the SEC has yet to initiate any enforcement action. However, the government indicated that stablecoins will be a target of its expanding crypto market special enforcement team last year. When Paxos was founded in 2012, it also established itBit, a digital asset exchange, and created the Paxos Dollar (USDP), a stablecoin.
