Crypto firm Paxos ordered to stop minting Binance dollar-pegged token as SEC crackdown expands
-
Paxos has been ordered by regulators to stop issuing Binance’s dollar-pegged stablecoin.
-
The crypto firm will stop minting BUSD next week as it reportedly faces a lawsuit from the SEC.
-
BUSD is the world’s third largest stablecoin, but the SEC has called it an unregistered value, according to the WSJ.
Crypto firm Paxos has been ordered to halt the issuance of Binance’s dollar-pegged coin, amid a wider regulatory crackdown following a reported lawsuit by the Securities and Exchange Commission (SEC).
A statement released on Paxos’ website said it would cease issuing the BUSD token as of February 21, under the guidance of the New York Department of Financial Services (NYDFS).
On Sunday, the Wall Street Journal reported that Paxos was facing a lawsuit from the SEC over the offering of BUSD, which the regulator said was an unregistered security.
Paxos and Binance partnered to launch BUSD in 2019. The Binance-branded stablecoin is pegged to the dollar in a one-to-one relationship.
In a Monday statement to Insider, a spokesperson for Binance confirmed that Paxos had been ordered to stop minting the coin by the NYDFS. It said the stablecoin was wholly owned and managed by Paxos and as a result the coin’s market value would only decrease over time.
“Given the ongoing regulatory uncertainty in certain markets, we will consider other projects in these jurisdictions to ensure our users are insulated from further undue harm,” the spokesperson added.
BUSD is the world’s third-largest stablecoin behind Tether and USD coins, with a market capitalization of more than $16 billion as of Monday, according to CoinMarketCap. The price of BUSD fell by 0.19% early Monday following news of an attack.
Regulators’ grip on the crypto market is rapidly tightening in the wake of the collapse of FTX. It has already sued crypto giants Genesis and Gemini for offering and selling unregistered securities linked to their collective Gemini Earn program, which crumbled after Sam Bankman-Fried’s FTX exchange collapsed.
Last week, crypto exchange Kraken agreed to end its “staking” program, which offered rewards if investors locked up their holdings of certain digital assets, and agreed to pay $30 million in a settlement to the SEC in the process.
NYDFS and the SEC did not immediately respond to Insider’s request for comment.
Read the original article on Business Insider
