Paxos says it is prepared to "vigorously litigate" with SEC if necessary.
Paxos Trust Company, a New York-based financial institution and the issuer of BUSD and USDP stablecoins, says it “categorically disagrees” with US Securities and Exchange Commission’s claims that Binance USD (BUSD) is a security.
In its press release shared on February 13th, the stablecoin issuer confirmed that it received a Wells Notice from the US Securities and Exchange Commission on February 3rd.
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According to the press release, in the Wells Notice, SEC alleges that BUSD is a security and Paxos should have registered it under the federal securities laws.
In a public response to SEC’s allegations, Paxos noted that Binance USD (BUSD) token “is not a security under the federal securities laws.”
On top of that, the company highlighted that there were no other allegations against Paxos and reassured its customers that it was always ensuring the safety of their assets.
To be clear, there are unequivocally no other allegations against Paxos. Paxos has always prioritized the safety of its customers’ assets. BUSD issued by Paxos is always backed 1:1 with US dollar-denominated reserves, fully segregated and held in bankruptcy remote accounts.
At the end of its response, Paxos emphasized that it plans to collaborate with the Securities and Exchange Commission to solve this issue. However, the company said that it is prepared “to vigorously litigate if necessary.”
The rumors about the Securities and Exchange Commission issuing the Wells Notice to Paxos broke on February 12th. However, the US SEC is not the only regulator applying pressure to Paxos over its BUSD stablecoin.
On February 13th, the New York Department of Financial Services (NYDFS) commanded Paxos to stop issuing Binance USD (BUSD) tokens. On the same day, Paxos issued a press release revealing that it will halt the minting of BUSD on February 21st.
However, the stablecoin issuer highlighted that it will support BUSD tokens at least until February 2024. Binance’s CEO Changpeng Zhao also emphasized that the crypto exchange will continue to support BUSD “for the foreseeable future.”
