Twelve hours
after The Wall Street Journal (WSJ) reported that cryptocurrency firm Paxos is
facing a Securities and Exchange Commission (SEC) lawsuit over violations of
user protection regulations, the further events escalated quickly. The company decided to halt
mint of new Binance’s BUSD tokens, and the cryptocurrency exchange chief
executive, Changpeng ‘CZ’ Zhao, calms clients that funds are safe
SEC to Go After Paxos
The WSJ
reported on Monday night that, according to people familiar with the matter,
the SEC intends to file a lawsuit against Paxos, a stablecoin provider and the itBit
crypto exchange operator.
New York regulators directed a crypto company to stop issuing one of the largest dollar-pegged cryptocurrencies as a government clampdown on the sector widens https://t.co/iPfHjdo2lV
— The Wall Street Journal (@WSJ) February 13, 2023
The SEC was
said to have sent the company’s representatives a so-called Wells notice, a
type of document the agency uses to inform entities of potential legal actions
against them. According to the regulator, the Binance USD (BUSD) stablecoin
that Paxos mints and lists bear the hallmarks of unregistered securities.
The
four-year partnership between Binance and Paxos that began in 2019, has now
come into question. Meanwhile, the SEC is putting pressure on the crypto
industry, having cracked down on Kraken, another crypto exchange, for…
