SEC sues Paxos Trust for listing Binance USD stablecoin

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According to the WSJ, the Commission onUS Securities and Exchange Commission (SEC) is suing Paxos Trust for listing the BUSD stablecoin. The regulator claims the company violated securities laws.

As journalists from The Wall Street learnedJournal (WSJ), the SEC issued a Wells notice to Paxos Trust.  This is a formal warning informing the recipient that the agency plans to take enforcement action against him or her. The notice is issued upon completion of an investigation into possible violations of securities laws or regulations. 

Thus, Paxos was officially presentedaccusing the regulator of violating securities laws. It is noteworthy that for most investors, the stablecoin Binance USD (BUSD) is directly associated with Binance, despite the fact that it is a joint project of the cryptocurrency exchange and the trust company Paxos. In 2019, at the time of the launch of the stablecoin, Binance stated:

“We are proud that our stablecoin allows trusted companies like Binance to offer products tailored to their users.”

However, now, against the backdrop of a possible legalinvestigation, Binance disowned direct participation in the project. A Binance spokesperson told the WSJ that BUSD is “a product issued and owned by Paxos,” and the exchange merely licensed the use of its trading brand.

An SEC spokesman declined to comment.upcoming investigation. By law, Paxos can appeal the SEC's charges within 30 days by submitting to the regulator an extended report on its activities and the reasons why the regulator's charges are unfounded. However, the final decision on whether to submit materials to judicial authorities rests with the SEC.

If the SEC takes its decision to court, andIf the judicial authorities side with the regulator, their findings will have long-term consequences not only for the company’s reputation, but also for the careers of Paxos executives - from multimillion-dollar fines and the introduction of a ban on the profession, up to criminal punishment.

Let us remind you that last week in relation toPaxos, the issuer of another stablecoin, the Paxos Dollar (USDP), has been investigated by the New York State Department of Financial Services (NYDFS).