SEC sues Paxos Company over BUSD Stablecoin

CoindeskFebruary 13, 2023

The US Securities and Exchange Commission (SEC) is reportedly preparing to sue Crypto Trust Company, Paxos, over its role in facilitating the sale of Binance USD, a stablecoin. According to a report from the Wall Street Journal, the SEC is alleging that Paxos and Binance, the world's largest cryptocurrency exchange, broke federal securities laws by selling unregistered securities.

Stablecoins are digital assets designed to hold their value relative to a fiat currency, like the US dollar, and are becoming increasingly popular in the crypto industry. Binance USD, which is pegged 1:1 to the US dollar, has become one of the most widely used stablecoins, with a market capitalization of over $20 billion. The SEC's lawsuit could have significant implications for the stablecoin market and the wider cryptocurrency industry, as it seeks to clarify the legal status of digital assets.

Paxos, which is a New York-based trust company, is said to have played a key role in facilitating the sale of Binance USD, including working with Binance to create and market the stablecoin. Paxos has also been actively involved in promoting the use of stablecoins for mainstream financial applications, including remittances and payments.

The SEC's lawsuit is reportedly part of a wider crackdown on the cryptocurrency industry, as regulators seek to impose greater oversight on digital assets. The regulator has taken a particularly hard line on stablecoins, which it views as securities and therefore subject to federal securities laws. If the lawsuit is successful, it could have major implications for the future of stablecoins, including limiting their widespread use in the financial sector.

This news is likely to cause significant uncertainty in the crypto industry, as market participants wait to see how the SEC's lawsuit plays out and what its implications will be for stablecoins and other digital assets.