Stablecoin issuer Paxos is reportedly in discussions about its stablecoin Binance USD (BUSD) with the United States Securities and Exchange Commission following Wells’ notice from the financial regulator.
According to a Feb. 21 Reuters report, Paxos chief executive Charles Cascarilla said the company was “engaged in constructive discussions” with the SEC and would continue to speak privately. The report follows stablecoin issuers facing lawsuits from the SEC, where the regulator declared BUSD an unregistered security.
Cascarilla reportedly said that Paxos will consider defending the position that BUSD is not a security through litigation. On February 13, the New York Department of Financial Services – Paxos is licensed in the US state – ordered the company to stop issuing BUSD. The company announced that it will stop printing stablecoins from February 21.
Paxos in discussions with US SEC about Binance stablecoin- internal email https://t.co/3CS9UBPGV5 pic.twitter.com/LyxjCwU0bj
– Reuters Business (@ReutersBiz) February 21, 2023
An SEC spokesperson previously told Cointelegraph that it would not comment on “whether or not there is a possible investigation” with Paxos, but the regulator’s move is the latest in a series of crypto enforcement actions. The SEC announced that it had reached an agreement with Kraken on February 9, in which the company agreed to stop staking services or programs for US clients and pay $30 million.
Related: SEC lawsuit against Paxos over BUSD baffles crypto community
The NYDFS investigation into Paxos may stem from a report from Circle, which reportedly filed a complaint with state regulators about Binance’s reserves. After the news about BUSD, data from Binance suggested a surge in withdrawals – about $2.7 billion in outflows between February 12 and February 13.