The stablecoin issuer appears to be working with the US SEC to determine if BUSD is an unregistered security.
Paxos, a New York-based financial institution and the issuer of USD-pegged stablecoins, is reportedly in discussions with the United States Securities and Exchange Commission (SEC) over Wells Notice issued by SEC.
According to the Reuters report shared on February 21st, the news was revealed by Paxos CEO Charles Cascarilla in a private email to the company's employees.
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In particular, in the email, Charles Cascarilla highlighted that Paxos executives are “engaged in constructive discussions with the SEC” and will continue to have this dialogue “in private.”
Over a week ago, several United States financial regulators launched investigations into Paxos and its BUSD token.
On February 12th, the news broke that the US Securities and Exchange Commission issued a Wells Notice to Paxos, claiming it violated investor protection laws with the Binance USD (BUSD) token. In the Wells Notice, SEC reportedly insisted that BUSD is an unregistered security.
On February 13th, the stablecoin issuer shared a press release commenting on the news. In the statement, Paxos confirmed that on February 3rd, it received a Wells Notice from the US regulator.
However, in the press release, Paxos highlighted that it “categorically disagrees” with claims that BUSD is a security under federal securities laws. At the end of its statement, Paxos noted that it will collaborate with SEC to solve the underlying issues but stated that it is prepared “to vigorously litigate if necessary.”
The Securities and Exchange Commission investigation is not the only problem Paxos has been facing. In the same week, The New York Department of Financial Services (NYDFS) launched its own investigation into Paxos.
At the beginning of last week, NYDFS ordered Paxos to cut all of its ties with cryptocurrency exchange Binance and cease the issuance of Binance USD (BUSD). At that time, the stablecoin issuer promised to stop minting BUSD on February 21st.
