The Securities and Exchange Commission continues to impose various legal actions against crypto-related firms.
The United States Securities and Exchange Commission (SEC), an independent agency of the US federal government enforcing the law against market manipulation, is reportedly planning to sue stablecoin issuer Paxos Trust Co.
According to the Wall Street Journal report shared on February 12th, SEC claims that Paxos violated investor protection laws with Binance USD (BUSD) token.
Did you know?
Want to get smarter & wealthier with crypto?
Subscribe - We publish new crypto explainer videos every week!
How Does Cryptocurrency Work? (Explained with Animation)
The person familiar with the matter revealed that the Securities and Exchange Commission had issued a Wells Notice to Paxos. Based on the Wall Street Journal news report, SEC’s Wells Notice alleges that Binance USD (BUSD) is an unregistered security.
In a nutshell, Wells Notice is a document that informs companies about plans to enforce certain actions. It is worth noting that according to the law, the recipient has 30 days to respond to allegations via Wells Submission. In the document, the company must provide arguments why the charges shouldn’t be brought.
When asked about the possible lawsuit, the Securities and Exchange Commission spokesperson stated that SEC "does not comment on the existence or nonexistence of a possible investigation."
On the other hand, Binance’s spokesperson noted that the Binance USD token is a “Paxos issued and owned product,” with Binance only licensing its brand for the use of BUSD. The spokesperson added:
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.
On top of that, a Binance spokesperson highlighted that Paxos is regulated by the New York Department of Financial Services (NYDFS). It is worth noting that just the other week, the news broke that NYDFS is reportedly investigating Paxos.
SEC continues to target crypto-related firms. On February 9th, cryptocurrency exchange Kraken reached a settlement with the US SEC over charges that Kraken failed to “register the offer and sale of their crypto-asset staking-as-a-program.”
