Paxos was issued a Wells notice by the Securities and Exchange Commission on Saturday for engaging in the trading of an unregistered security known as BUSD. Paxos has now replied to the notification by the SEC staff by issuing a statement in which they refute the claims.
Paxos said in a press statement that it ” absolutely disagrees” with the SEC’s assessment of BUSD as a security since BUSD is not the instrument that is governed by the federal securities laws. It has been made very clear by Paxos that the warning is solely applicable to BUSD.
The following is an excerpt from a complete statement: “Paxos unequivocally disagrees with the staff of the SEC because BUSD is not a security under federal securities laws. Only BUSD is included in the scope of this SEC Wells notice. To be quite clear, there are not any further complaints leveled against Paxos at this time. Paxos has made ensuring the security of its clients’ assets a top priority from the very beginning. BUSD that is issued by Paxos is always backed 1:1 by reserves denominated in US dollars, and these reserves are properly separated and maintained in accounts that are bankruptcy distant. Regarding this matter, we want to communicate with the staff of the SEC, and if necessary, we are prepared to forcefully litigate.”
In addition, Paxos has said that, from February 21, it would no longer issue any additional BUSD tokens in compliance with the directive issued by the New York Department of Financial Services.
BUSD is the stablecoin that is backed by fiat currency and has a one-to-one exchange rate with the US dollar. In the midst of ongoing regulatory scrutiny and law enforcement action, the value of BUSD dropped below its fixed level, reaching $0.9950. It caused widespread fear among holders of BUSD, which resulted in the holders moving their tokens into other stablecoins.
Compiled by Coinbold