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BNB Token Plummets as SEC takes aim at BUSD

The Securities and Exchange Commission’s (SEC) action against Binance and Paxos over BUSD stablecoin has scared off investors. According to data from CoinGecko, the native token of the leading exchange, BNB, dropped by 6% yesterday before recovering some on Wednesday morning.

In addition, data gathered by Nansen shows that traders are pulling out their funds from Binance. In the past 24 hours, the exchange has processed withdrawals worth $568 million.

BNB is changing hands for $290 as of this writing, having dropped from approximately $303 in the last 48 hours. Overall, Binance’s native token has had a rough week, declining by over 11% over the last seven days. However, despite the price drop, BNB remains among the largest coins by market cap. Its total value sits at $46 billion, as per CoinGecko.

Binance’s BUSD Woes

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Paxos, the issuer of the popular stablecoin, BUSD, confirmed yesterday that the SEC was planning to launch an enforcement action for alleged violation of investor protection policies. The regulator also claims that the stablecoin is issued as an unregistered security.

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However, Binance boss Changpeng Zhao tends to differ from the SEC statement. He says if BUSD is considered a security, then it could affect the development of the crypto industry. Zhao continues to argue that no one buys a stablecoin in anticipation of more profit; therefore, BUSD is not a security.

Along with the SEC’s planned lawsuit, the New York Department of Financial Services, an institution that regulates Paxos, also asked the crypto firm to suspend the issuance of BUSD. However, Paxos has continued to disagree with these regulators citing that BUSD does not fit the description of security under the stipulated securities laws.

Paxos Says the Circulating BUSD Could be Redeemable for a Year

Paxos partnered with Binance to launch BUSD back in 2019. The stablecoin is currently the third biggest stablecoin by market cap, with a total value of $16.2 billion. Although BUSD will no longer be minted from February 21, Paxos says it will continue supporting the stablecoin for at least a year.

This week’s move on Paxos indicates United States regulators’ efforts to ensure every crypto firm complies with the law. The SEC had previously hit exchange Kraken with a $29 million fine for not registering its crypto-staking service with the agency.

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Andrew Richard

Andrew is a news writer for Tokenhell, he enjoys tuning in to the daily crypto markets and writing about the latest updates and happenings.

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