Business NEWS

    News that matters

    Paxos BUSD Ceases Issuance, SEC Investigation, Binance Suspends USD Transfers

    /
    /
    /
    77 Views

    The New York Department of Financial Services (NYDFS) has directed Paxos, a regulated institution overseen by the NYDFS and audited by a top-four accounting firm, to cease issuance of new BUSD tokens as of February 21, 2023.[0] This action does not impact Paxos' ability to continue serving new or existing customers, and their commitment to grow their staff or fund their business objectives will remain unchanged.[1] All BUSD tokens issued by Paxos Trust will still be backed 1:1 with US dollar-denominated reserves and held in bankruptcy remote accounts.[1] Paxos will continue managing redemptions for the product until February 2024.[2]

    PayPal has reportedly paused work on its forthcoming stablecoin offering due to Paxos being investigated by the NYDFS.[3] Stablecoins, such as BUSD, are digital currencies that are designed to hold steady, usually by pegging its value to an underlying asset, such as the US dollar.[4]

    The SEC issued a letter to Paxos known as a Wells notice, which the agency uses to inform companies and individuals of a possible enforcement action.[5] The Wall Street Journal reported Monday that the SEC would argue that Paxos' BUSD product was a security, an approach it has employed with other crypto firms.[6]

    In response to the SEC’s investigation, Binance minted nearly $50 million worth of TrueUSD (TUSD).[7] TUSD is a stablecoin pegged to the US dollar, launched in 2018 and listed on Binance in May of that year.[7] Binance CEO Changpeng Zhao (CZ) warned of “profound impacts” on the crypto industry if BUSD is ruled as a security.[8]

    On-chain data shows that Alameda and Justin Sun are the two largest minters of TUSD, with Alameda minting a total of 1.64B TUSD and Justin Sun minting a total of 889M TUSD in history.

    Binance temporarily suspended US dollar transfers as part of an escalating regulatory effort to rein in the once free-wheeling crypto industry.[2] The SEC has also settled with crypto exchange Kraken over allegations of unregistered offering and sale, in connection with Kraken's crypto staking platform.[0]

    Customers of Paxos both old and new can redeem their funds in US dollars or exchange their BUSD tokens for Pax Dollar (USDP), a US dollar-backed stablecoin regulated by the Paxos Trust.[9]

    0. “Crypto Takedown Explained” The Defiant – DeFi News, 16 Feb. 2023, https://thedefiant.io/crypto-takedown-explained

    1. “Paxos Will Halt Minting New BUSD Tokens” PR Newswire, 13 Feb. 2023, https://www.prnewswire.com/news-releases/paxos-will-halt-minting-new-busd-tokens-301744964.html

    2. “Stablecoin issuer Paxos ordered to halt creation for Binance USD” AOL, 13 Feb. 2023, https://www.aol.com/stablecoin-issuer-paxos-ordered-halt-134410690.html

    3. “Former SEC Official Reacts to PayPal’s Decision to Ditch Its Stablecoin” U.Today, 12 Feb. 2023, https://u.today/former-sec-official-reacts-to-paypals-decision-to-ditch-its-stablecoin

    4. “Cryptocurrencies feel the heat as regulatory pushback hardens” Sydney Morning Herald, 14 Feb. 2023, https://www.smh.com.au/business/markets/cryptocurrencies-feel-the-heat-as-regulatory-pushback-hardens-20230214-p5ckfm.html

    5. “Binance Starts Minting True USD (TUSD) as TRU Price Explodes” CryptoPotato, 17 Feb. 2023, https://cryptopotato.com/binance-starts-minting-true-usd-tusd-as-tru-price-explodes/

    6. “Crypto firm Paxos to face SEC charges, ordered to stop minting Binance stablecoin” CNBC, 13 Feb. 2023, https://www.cnbc.com/2023/02/13/paxos-ordered-to-cease-minting-binance-stablecoin-by-new-york-regulator.html

    7. “Binance Bolsters Stablecoin’s Role In Market With $50 Million TrueUSD Minting” Coinpedia Fintech News, 17 Feb. 2023, https://coinpedia.org/news/stablecoins-on-the-rise-binances-50-million-trueusd-minting-signals-a-new-era-of-crypto-stability-amid-regulatory-challenges/

    8. “SEC Clampdown Has Crypto Space Abuzz, Pantera Capital Says We're in Bull Market, and Much More — Week in …” Bitcoin News, 19 Feb. 2023, https://news.bitcoin.com/sec-clampdown-has-crypto-space-abuzz-pantera-capital-says-were-in-bull-market-and-much-more-week-in-review

    9. “US regulator orders crypto firm to stop minting Binance stablecoin” CNN, 15 Feb. 2023, https://www.cnn.com/2023/02/14/investing/paxos-binance-busd-halt-order-us-intl-hnk/index.html

    Leave a Comment

    This div height required for enabling the sticky sidebar