Paxos Trust Company has issued a statement in which it “categorically disagrees” with the United States Securities and Exchange Commission’s characterization of Binance USD (BUSD) as a security.
In a statement released on February 13, the issuer of BUSD confirmed recent reports that it had been served with a Wells notice by the United States Securities and Exchange Commission regarding BUSD and its alleged failure to register the offering in accordance with federal securities laws. These reports related to BUSD and its alleged failure to register the offering.
According to Paxos, “Paxos unequivocally disagrees with the SEC staff because BUSD is not a security under the federal securities laws.” Paxos said that this disagreement was reached.
The company said that it had received the notification on February 3 and added that “there are unquestionably no further charges against Paxos.”
The statement continued by saying that “We will engage with this matter with the SEC staff and are prepared to fiercely litigate if necessary.”
Paxos was given the instruction to suspend the issue of BUSD on February 13 by the New York Department of Financial Services (NYDFS).
Paxos has indicated that it would comply with the request by tweeting on February 13 that it will stop minting new BUSD tokens beginning on February 21.
Paxos, on the other hand, has said that BUSD will continue to get full support and will continue to be redeemable to newly onboarded clients until at least February 2024.
Paxos stated that “new and existing Paxos customers will be able to redeem their funds in US dollars or convert their BUSD tokens to Pax Dollar (USDP), a regulated US dollar-backed stablecoin also issued by Paxos Trust.” Paxos customers will be able to redeem their funds in US dollars or convert their BUSD tokens to Pax Dollar (USDP).
It has been claimed that the New York State Department of Financial Services, often known as the NYDFS, received a complaint about Binance’s reserves from the stablecoin issuer Circle prior to the exchange’s crackdown on BUSD.
Even though the United States Securities and Exchange Commission and the New York Department of Financial Services have ordered Paxos to cease minting BUSD, the CEO of Binance, Changpeng “CZ” Zhao, has said that the exchange would continue to support the stablecoin.