Paxos Trust Co. has received a letter from the United States Securities and Exchange Commission (SEC) discussing the possibility of a legal action being filed against the company. According to a report by the WSJ, the cryptocurrency company is suspected of breaking rules that safeguard investors.
The regulatory agency informed corporations and people via the delivery of a Wells notice, which is a letter that the regulatory agency sends out before the execution of a lawsuit. According to the notification, Paxos is the issuer of the listed unregistered securities known as Binance USD. It is a stablecoin that has a one-to-one exchange rate with the US dollar.
Nevertheless, it is still unknown if the warning is issued against listing tokens, issuing tokens, or both of these activities.
The representative for the Paxos corporation who was asked to comment on the situation declined. Binance has said that it solely has the authority to grant licenses for tokens, while Paxos is the entity that issues and owns BUSD.
According to a statement made by a spokeswoman for Binance, “Stablecoins are an essential safety net for investors looking for sanctuary from unpredictable markets, and restricting their access will directly damage millions of individuals all over the world.” We shall keep a close eye on the developing scenario. Our users located all over the world have access to a diverse selection of stablecoins.
However, if Paxos gives a good answer to the SEC in writing, there is a possibility that this situation will not result in a lawsuit being filed. An accuser has the opportunity to stop enforcement action from being taken against them by responding to the Well notice in a proper way. The answer was evaluated by the commissioners of the agency, and conclusions are reached via a vote process.
BUSD has a significant domination in the market for stablecoins and now ranks third among all cryptocurrencies in terms of market capitalization. According to CoinGecko, the current market capitalization of BUSD is more than $16 billion.
The SEC has ramped up its enforcement activities against cryptocurrency businesses. The major cryptocurrency exchange, Kraken, is now the subject of an investigation by the Securities and Exchange Commission (SEC) due to allegations that the company offered unregistered securities.
Compiled by Coinbold