hangpeng Zhao (CZ), CEO of Binance, noted on Twitter today that the New York Department of Financial Services has ordered Paxos to stop issuing the stablecoin Binance USD (BUSD).
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Consequently, CZ anticipates that the use of this cryptoactive will be progressively discouraged from the exchange. He even estimates that users will migrate to other stablecoins after the news breaks and then BUSD will no longer be used as the main trading pair.
Paxos Trust Company is a regulated startup in the United States, issuer of the stablecoins Pax Dollar (USDP) and BUSD, the latter in partnership with the Binance exchange.
As Paxos noted in a report published in November of last year, BUSD is backed entirely by a mix of government bonds and US dollars.
In its official statement, Paxos admits that it will stop issuing BUSD on February 21 and that the stablecoin will be redeemable until February 24. It adds that new and existing clients trading on its trading platform will be able to redeem their funds in US dollars or convert their BUSD tokens to USDP.
There is talk of an SEC lawsuit
The US Securities and Exchange Commission (SEC) is apparently planning to sue Paxos for violating investor protection laws, alleging that BUSD is an unregistered security, as reported by the Wall Street Journal yesterday.
CZ said he had no knowledge of an alleged SEC lawsuit, but added: “If BUSD is declared a security by the courts, it will have a profound impact on how the cryptocurrency industry will (or will not) develop in jurisdictions.” where determined as such.“
He added that in the meantime, Binance will continue to support BUSD for the foreseeable future and that Paxos will continue to provide services for BUSD redemption. He also said that his partner had assured him that his fund reserves are safe.
The news that Paxos is under scrutiny from regulators comes shortly after cryptocurrency exchange Kraken was forced to cancel its crypto asset staking service, as CriptoNoticias reported last week. Even days before, rumors were already spreading that regulators were setting their sights on other companies.
All this has led the community to suspect that the SEC and other regulators have launched an anti-cryptocurrency agenda, given that last year institutional entities have increased sanctions on cryptocurrency companies by 50%.
take from: https://www.criptonoticias.com/