Stablecoin issuer Paxos reportedly discussed Binance USD (BUSD) stablecoin with the United States Securities and Exchange Commission following Wells’ notification from the financial regulator.
According to a February 21 Reuters report, Paxos CEO Charles Cascarilla he said the firm has been “engaged in constructive discussions” with the SEC and will continue to speak privately. The report tracked the stablecoin issuer faces a lawsuit from the SECin which the regulator claimed that BUSD was an unregistered security.
Cascarilla reportedly said Paxos would consider defending its position that BUSD is not a security through litigation. On February 13, the New York Department of Financial Services — Paxos is licensed in the US state — ordered by the company stop issuing BUSD. The firm has announced that it will stop mining the stablecoin as of February 21.
Paxos in discussions with US SEC regarding Binance stablecoins – internal email https://t.co/3CS9UBPGV5 pic.twitter.com/LyxjCwU0bj
— Reuters Business (@ReutersBiz) February 21, 2023
An SEC spokesperson previously told Cointelegraph that it would not comment on “the existence or non-existence of a possible investigation” with Paxos, but the regulator’s move was the latest in a series of cryptocurrency enforcement actions. The SEC reported that it did reached an agreement with Kraken on February 9, in which the firm agreed to stop offering betting services or programs to US clients and pay $30 million.
Related: SEC lawsuit against Paxos over BUSD disrupts crypto community
The NYDFS investigation against Paxos may have stemmed from a report from Circle that allegedly complaint sent to the state regulator regarding Binance reserves. After the news around BUSD, data from Binance indicated that it was there was an increase in withdrawals — roughly $2.7 billion in outflows between February 12 and 13.