March 29, 2024

SEC is preparing a strike on Binance

The multi-billion dollar losses of FTX investors damaged the image of the regulator. In an attempt to justify lax oversightbehind the industry, the SEC is starting 2023 by tightening the screws. The key areas for tightening are PoS coins and stablecoins, Binance's BUSD lies in the crosshairs of both.

Coins on PoS provide the opportunity to receivepassive income, which makes it possible to give them the status of a security. In this case, the crypto exchange must have an appropriate license, and more stringent requirements are imposed on bidders.

In making claims against aggregators, the SEC does notis embarrassed by the presence of holes in the legislative area and the lack of a mechanism for registering staking services. Last week, a pre-trial settlement was reached with Kraken, in which the company received a $30 million fine and closed access to passive income. Since the share of the crypto exchange in Ethereum staking is 9%, over the past four days, the altcoin has lost 3.6% against Bitcoin.
SEC is preparing a strike on Binance

Image Source: Cryptocurrency ExchangeStormGain

Binance Offers Investors Receivepassive income when staking BUSD issued by Paxos Trust Company. Paxos was one of the first to obtain a BitLicense and is regulated by the New York City Department of Financial Services NYDFS. In addition to BUSD, Paxos also launched the USDP stablecoin and the PAXG gold-pegged token.

Yesterday, the WSJ published an article with plansSEC to sue Paxos for issuing unregistered BUSD security. In addition to pressure from the SEC, the NYDFS also initiated its investigation into Paxos.

Claims against Paxos can be related not only tostaking. At the beginning of the year, Bloomberg published an article about the gap in providing a duplicate of BUSD. Paxos stablecoin is an ERC-20 token. Binance is issuing its BUSD in the form of BEP-20 to expand its range of services. According to the information provided, in some periods the supply of the B-token exceeded the security by more than $1 billion.
SEC is preparing a strike on Binance

Image Source:bloomberg.com

The presence of systemic risk poses a threat to both issuers. Representatives of the crypto-exchange after some time admitted the presence of an error in management.

It is possible that within the framework of the pre-trialsettlement, Paxos will terminate its business relationship with Binance and stop supporting BUSD. In this case, the crypto exchange will remain the only guarantor for the stablecoin, which will not add to its attractiveness.

 

Analytical group StormGain

(platform for trading, exchanging and storing cryptocurrency)