Paxos, the stablecoin's issuer, has stated that it is willing for the US Securities and Exchange Commission to forbid the issuing of Binance USD (BUSD). The SEC reportedly sent the lawsuit's documents to Paxos on Monday.
According to the SEC, the organization is getting ready to pursue possible enforcement action against them, including attempts to outlaw BUSD. According to the corporation, Paxos got notification from the SEC that the agency is considering taking enforcement action against the company for failing to list BUSD as collateral.
Because BUSD is not a security under federal securities laws, Paxos insisted in a statement that it disagreed with SEC officials. To be clear, Paxos is not facing any more allegations.
In addition to making the announcement, Paxos also said it would halt creating additional BUSD, its dollar-pegged stablecoin that was created under a license with Binance, the biggest cryptocurrency exchange.
BUSD will debut in 2019 thanks to a partnership between Binance and Paxos. According to data from CoinGecko, the coin presently ranks seventh in terms of market capitalization with a total market value of almost US$15.8 billion.
In a statement made on Monday, Paxos declared that it will break up its partnership with Binance. Customers can trade stablecoins for at least a year, the company tells them, even if its partnership with Binance weakens.
Paxos claimed it will closely collaborate with the New York Department of Financial Services (NYDFS) on terminating its BUSD offering but did not mention the SEC until later in the day when it announced it would no longer be issuing new BUSD. NYDFS has supervised Paxos' BUSD on Ethereum issuance procedure, guaranteeing that it is properly backed by the US dollar through routine audits.
However, BUSD is also made available as a token on the Binance Smart Chain using a method that Binance freely admits isn't always ideal. The exchange keeps the same quantity of BUSD issued by Paxos as collateral and releases what it refers to as Binance-Peg BUSD on its own network in order to issue BUSD on Binance Smart Chain.
Paxos' decision to take the SEC on comes in the midst of the agency's regulatory turbulence, which featured a US$30 million settlement agreement it made with cryptocurrency exchange Kraken last week over issues with betting services the business provided to consumers in the US.