Paxos Says Its Prepared To Vigorously Litigate Over SEC’s Wells Notice

Paxos Says Its Prepared To Vigorously Litigate Over SEC’s Wells Notice 12

  • Paxos has categorically disagreed with the allegations made by the SEC in a recent notice. 
  • The Wells notice accused the BUSD issuer of violating investor protection laws by issuing the stablecoin. 
  • The stablecoin firm revealed in a statement that it was prepared to “vigorously litigate” against the SEC if necessary. 
  • The firm recently received an order from the NYDFS to stop minting new BUSD stablecoins.

Paxos Trust Company, the crypto firm behind the Binance USD stablecoin, has addressed the Wells notice issued by the U.S. Securities and Exchange Commission (SEC). The notice, which was sent to the firm on 3 February 2023, revealed the securities regulator’s intention to initiate enforcement actions against the stablecoin firm, alleging that it breached investor protection laws. The SEC claimed that BUSD, which is issued by Paxos, is a security and should’ve been registered with the agency as per federal securities laws. 

Paxos categorically disagrees with the SEC’s staff 

According to the press release from Paxos, the firm categorically disagrees with the allegations made by the SEC’s staff. The BUSD issuer clarified that the Binance-branded stablecoin was not a security under federal securities laws. The statement assured readers that the BUSD issued by the firm is always backed 1:1 with USD-denominated reserves held in bankruptcy remote accounts. 

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.”

To that end, the stablecoin issuer stated that it will engage with the SEC on this matter and was prepared to “vigorously litigate” if necessary. Earlier today, the New York Department of Financial Services ordered the firm to stop issuing new BUSD. A Binance spokesperson stated that the firm will stop minting BUSD, however, the auto-conversion of USDC, USDP, and TUSD deposits on its platform will continue. 

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