Paxos Ordered to Stop Minting BUSD After SEC Wells Notice
• The US Securities and Exchange Commission (SEC) plans to sue Paxos for violating investor protection laws.
• The New York State Department of Financial Services (NYDFS) has ordered Paxos to stop minting BUSD stablecoin.
• Paxos will end its relationship with the Binance-branded stablecoin in February 2024.
Paxos Receives Wells Notice from SEC
The U.S. Securities and Exchange Commission (SEC) has sent a Wells Notice to financial institution and technology company, Paxos, alleging violations of investor protection laws.
NYDFS Orders Issuer to Stop Minting BUSD
The New York State Department of Financial Services (NYDFS) has issued an order to Paxos requiring it to cease minting the Binance USD (BUSD) stablecoin. This follows an alleged investigation into the firm by the NYDFS that was first reported last month.
Report Claims SEC Plans to Sue Paxos
Sources cited by the Wall Street Journal indicate that the SEC plans to sue Paxos for investor protection violations related to its issuance and management of BUSD. Both companies have declined comment on the matter.
Paxos Manages Two Stablecoins
In addition to BUSD, Paxos manages two other dollar-pegged assets: pax dollar (USDP) and pax gold (PAXG). USDP has a market capitalization of approximately $898 million while PAXG’s is around $492 million, with both coins seeing decreases in supplies over the past year.
Paxos Ends Relationship with Binance Stablecoin in Feb 2024
Following 5 billion BUSD being redeemed in 24 days last month, Paxos announced that it will no longer mint BUSD as part of its agreement with Binance which ends in February 2024.