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Crypto Firm Paxos Faces SEC Lawsuit Over Binance USD Token (wsj.com) 17

The Securities and Exchange Commission has told crypto firm Paxos that it plans to sue the company for violating investor protection laws, WSJ reported, citing people familiar with the matter, the latest move in the agency's escalating campaign in crypto enforcement. From the report: The SEC's enforcement staff issued a letter to Paxos known as a Wells notice, which the agency uses to inform companies and individuals of a possible enforcement action, according to the people. The notice alleges that Binance USD, a digital asset that Paxos issues and lists, is an unregistered security, according to the people. BUSD is a Binance-branded stablecoin pegged to the dollar on a one-to-one ratio. Binance and Paxos announced the partnership to launch it in 2019. The Paxos-run digital asset exchange, itBit, also lists BUSD. Many other exchanges also list BUSD. It couldn't be determined if the SEC notice is specifically related to Paxos' issuing of the coin, the listing of the coin or both. "Paxos is not commenting on any individual matter," said a Paxos company spokeswoman. Binance said BUSD is issued and owned by Paxos, and it only licenses its brand. "We will continue to monitor the situation," it said in a statement. Separately, the New York Department of Financial Services ordered Paxos, which issues and lists Binance's dollar-pegged cryptocurrency, to stop creating more of its BUSD token, Binance said in a statement.
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Crypto Firm Paxos Faces SEC Lawsuit Over Binance USD Token

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  • by rsilvergun ( 571051 ) on Monday February 13, 2023 @09:48AM (#63289197)
    it's because the SEC is going after easy targets to establish a legal framework before going after the big guys.

    Also, I suspect they're trying to gradually unwind crypto instead of just destroying it outright. They have to know it's nothing but money laundering and ponzi schemes and that it can't survive even basic regulation. But they let it fester for so long that just killing it outright might hurt the broader economy (or more likely cost important people who gambled on it some money).

    So they're slowly chipping away at it. Like stopping a train on the tracks before it hits a car instead of blowing up the tracks.
    • Like stopping a train on the tracks before it hits a car instead of blowing up the tracks.

      I dunno man, they did just set that train wreck full of vinyl chloride on fire up in East Palestine, Ohio. My guess is that some folks in the government or with a lot of influence (Musk *cough*) don't want to see crypto go down in flames until they've made their money.

  • by DrMrLordX ( 559371 ) on Monday February 13, 2023 @10:42AM (#63289371)

    Binance pulled out of the US market years ago, and barred Americans from making deposits or trading on the platform.

    • Paxos, however, is incorporated in the State of New York. Perhaps that is why the SEC chooses to sue Paxos rather than Binance.

  • Crypto is a scam. Yes, there are definitely some shady charcters but wasn't the SEC supposed to protect "us" from Madoff? ". . .mastermind of the largest Ponzi scheme in history, worth about $64.8 billion. . ." https://en.wikipedia.org/wiki/... [wikipedia.org] Maybe, the big banks and the Federal Reserve are worried about losing control. Change is not easy and rarely accepted openly. Trying to keep the status quo of the old money system and keep people in debt is how the banking and finance industry became rich and powerfu
  • Personally I don't own anything "crypto" nor do I intend to. That said I do have an investment account through a regulated broker that deals with registered securities.

    My understanding has always been that none of the crypto offerings is regulated and that, like stocks, none of the values are guaranteed. So has the SEC determined that crypto is some sort of unregistered security that requires Paxos to abide by the investor protection laws or are they just responding to people whose get rich quick schemes didn't pan out?

    • The SEC is focusing on cryptoassets that offer "returns". They view it as a security because of that, and clearly an unregistered security because there really is no way to have it be registered at this point in time

  • Because then investor protection laws apply to it? Who would have thought. Yes, I think I support this!

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