Paxos Ready To “Vigorously Litigate” Over SEC’s Wells Notice

Paxos Trust Company, the entity issuing Binance USD (BUSD) stablecoin, has stated that it is prepared to “vigorously litigate” against the SEC over the regulatory body’s Wells Notice. 

The BUSD issuing entity has categorically disagreed with the allegations made by the SEC in its recent notice. 

Ready To Litigate 

Paxos Trust Company, the issuing entity of the Binance USD (BUSD) stablecoin, has responded to the Wells notice issued to it by the United States Securities and Exchange Commission (SEC). In its response, Paxos has categorically disagreed with allegations made by the SEC in the notice. The notice, sent to the firm on the 3rd of February, 2023, accused Paxos of violating investor protection laws by issuing the BUSD stablecoin. It also outlined the securitie’s regulators intention to initiate action against the stablecoin firm. 

According to the SEC, the BUSD stablecoin issued by Paxos qualifies as a security and should have been registered with the SEC in accordance with federal securities laws. 

Paxos Refutes Charges 

Paxos, in its press release, addressed the Wells notice, categorically disagreeing with the allegations made by the Securities and Exchange Commission. The company clarified that its stablecoin did not qualify as a security under federal securities laws. In its statement, Paxos stated that it would be engaging with the SEC on the issue and would go the litigation way if necessary. 

It also assured customers that the BUSD stablecoin issued by it has always been backed 1:1 with USD reserves held in bankruptcy remote accounts. 

“We will engage with the SEC staff on this issue and are prepared to vigorously litigate if necessary. This SEC Wells notice pertains only to BUSD. To be clear, there are unequivocally no other allegations against Paxos. Paxos has always prioritized the safety of its customers’ assets.” 

Paxos To Stop Issuing BUSD 

Paxos has also stated that it would stop issuing the BUSD stablecoin following an order issued by the New York Department of Financial Services. The company stated that the minting of new stablecoins would cease on the 21st of February, 2023. 

“Effective the 21st of February, Paxos will cease issuance of new BUSD tokens as directed by and working in close coordination with the New York Department of Financial Services (NYDFS). Paxos Trust, a regulated institution overseen by the NYDFS and audited by a top-four accounting firm, will continue to manage BUSD dollar reserves.”

However, it also said that it would allow BUSD redemptions until February 2024 at least. 

“Paxos has always prioritized the safety of its customers’ assets. That was true at our founding and remains true today. BUSD will remain fully supported by Paxos and redeemable to onboarded customers through at least February 2024.”

Speaking about the developments, a Binance spokesperson stated, 

“BUSD is a stablecoin wholly owned and managed by Paxos. As a result, the BUSD market cap will only decrease over time. Paxos will continue to service the product, manage redemptions, and will follow up with additional information as required.”

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.