WSJ: SEC will sue Paxos Crypto Trust Co. over Binance Stablecoin.

 

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Additionally, the New York Department of Financial Services is looking into Paxos.

According to the Wall Street Journal on Sunday, the U.S. Securities and Exchange Commission (SEC) plans to file a lawsuit against Paxos, the company that created the Binance USD (BUSD) and Pax Dollar (USDP) tokens, over the latter stablecoin.
According to an SEC spokeswoman who talked to Coinesk, the agency won't comment on whether or not there may be an inquiry.
According to the article, the SEC asserts that BUSD is an unregistered security. The news was released a few days after CoinDesk revealed that Paxos was being looked into by the New York Department of Financial Services, however it is unclear what exactly is being looked into.

The Paxos trust corporation, which is governed by New York law and has a provisional charter from the Office of the Comptroller of the Currency, a federal bank regulator, is the issuer of BUSD, a stablecoin with the Binance brand.
According to a representative for Binance, Paxos is the only owner and manager of BUSD, a stablecoin. Thus, the market capitalization of BUSD will continue to fall over time. Paxos will maintain the product, oversee redemptions, and provide follow-up with more details as needed. "Given the continued regulatory uncertainty in some regions, we will be assessing other initiatives in those jurisdictions to ensure our customers are shielded from further undue harm," Paxos further confirmed that the money are secure and completely covered by reserves in their banks.

Requests for response from Paxos spokespersons were not immediately responded to.
The revelation on Sunday comes just after the SEC and cryptocurrency exchange Kraken reached a settlement over allegations that the latter's staking services constituted an issuance of unregistered securities. According to the terms of the deal, Kraken did not accept or reject the allegations, but it did end all of its U.S. staking initiatives.