The Enforcement Division of the U.S. Securities and Exchange Commission (SEC) has issued a Wells Notice to Paxos — The Wall Street Journal (WSJ) reports, citing unnamed sources.
The New York Department of Financial Services has directed Paxos Trust Co., the issuer of the stablecoin Binance USD (BUSD), to stop further creation of BUSD. according to to the WSJ.
A Wells Notice is a formal notice issued by the SEC to notify recipients that it intends to take enforcement action against the SEC.
The SEC plans to sue Paxos for alleged violations of securities and investor protection laws. According to the notice, BUSD is considered an unregistered security.
Paxos launched a 1:1 dollar-pegged stablecoin in partnership with Binance in September 2019. crypto slate data.
what happens next
Wells’ notice does not imply that the SEC will take enforcement action. Her five commissioners of the SEC must vote to approve an enforcement action or settlement by the SEC.
Paxos may provide a written response to Wells’ notice explaining why it cannot be sued.
When the SEC nearly doubles its crypto and cyber units in May 2022, stablecoins will Focus areaAccording to SEC Chairman Gary Gensler, stablecoins are similar to bank deposits and money market mutual funds.
The article was updated at 09:10 GMT with additional details.
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