Crypto Firm Paxos Faces SEC Lawsuit Over Binance USD Token

The Securities and Exchange Commission has told crypto firm Paxos that it plans to sue the company for violating investor protection laws, WSJ reported, citing people familiar with the matter, the latest move in the agency's escalating campaign in crypto enforcement. From the report: The SEC's enforcement staff issued a letter to Paxos known as a Wells notice, which the agency uses to inform companies and individuals of a possible enforcement action, according to the people. The notice alleges that Binance USD, a digital asset that Paxos issues and lists, is an unregistered security, according to the people. BUSD is a Binance-branded stablecoin pegged to the dollar on a one-to-one ratio. Binance and Paxos announced the partnership to launch it in 2019. The Paxos-run digital asset exchange, itBit, also lists BUSD. Many other exchanges also list BUSD. It couldn't be determined if the SEC notice is specifically related to Paxos' issuing of the coin, the listing of the coin or both. "Paxos is not commenting on any individual matter," said a Paxos company spokeswoman. Binance said BUSD is issued and owned by Paxos, and it only licenses its brand. "We will continue to monitor the situation," it said in a statement. Separately, the New York Department of Financial Services ordered Paxos, which issues and lists Binance's dollar-pegged cryptocurrency, to stop creating more of its BUSD token, Binance said in a statement.

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