- The NYDFS has ordered Paxos Trust Co. to stop issuing BUSD stablecoin.
- This comes after the SEC issued Paxos with a wells notice on the same.
- The SEC alleges Binance USD is an unregistered security.
Just hours after the US Securities and Exchange Commission (SEC) issued a wells notice to Paxos, the New York Department of Financial Services (NYDFS) has Paxos Trust Co. to stop issuing the Binance USD (BUSD) stablecoin on its exchange itBit.
According to the wells notice issued by the SEC, Binance USD is an unregistered security and Paxos violated investor protection laws by listing and issuing the stablecoin. Normally, firms have the opportunity to respond in writing to convince the SEC why it should not continue with a lawsuit after a wells notice.
Redemptions of the Paxos product to continue
While the NYDFS has asked Paxos to stop creating any more BUSD, Binance has issued a statement saying that Paxos will continue to manage the redemption of the product.
Only last week, the SEC said that crypto staking violated securities laws and forced crypto exchange Kraken to shut down its crypto staking product after agreeing on a $30 million settlement deal for issuing the product without first seeking authorization. Coinbase which had said that the SEC was planning to crack down on crypto staking, has decided to take up the fight and defend its crypto staking offering in court if need be.
The securities debate within the crypto industry has been there for some years now and has been in focus since the US SEC filed a lawsuit against Ripple Labs, three years ago, arguing that its Ripple (XRP) token is a security. The case is still ongoing with speculations that it could be ruled in favour of Ripple after a US Court recently ruled that another token, LBRY Credits (LBC), is not a security.