By Curtis Dye
Earlier on Sunday, the U.S. Securities and Exchange Commission revealed its intention to prosecute cryptocurrency firm Paxos Trust Co. for infringing investor protection statutes in its issuance of the Binance USD (BUSD) stablecoin.
Based on anonymous people affiliated with the subject, the Wall Street Journal reported that the SEC’s enforcement staff had sent a Wells notice, a letter used by the agency to warn businesses and individuals of potential enforcement action.
However, the WSJ asserted that the Wells notice is not the last indicator that the SEC will pursue legal action. Further, the post elaborated that receivers of the alert are permitted to respond to the SEC, clarifying why a lawsuit should not be pursued.
Binance’s BUSD stablecoin
In partnership with Paxos, Binance has helped promote using BUSD, a stablecoin tied to the U.S. dollar. Additionally, it has been sanctioned by New York State’s Department of Financial Services (NYDFS), a watchdog widely recognized for its strict requirements for the businesses and services it regulates. The asset can be bought or cashed out at any time for 1 BUSD per 1 USD.
Also read:In an email statement, a Binance spokesman said that restricting access to Stablecoins, a vital safety net for cryptocurrency investors, will affect millions worldwide. The email continued by saying that Binance is keeping a close eye on developments.
In connection with this, the Paxos Trust Co. was allegedly the subject of an inquiry by the New York Department of Financial Services. However, it is unclear what exactly was being looked into.
SEC imposed penalties on Kraken.
Moreover, earlier in the prior week, the SEC levied a US$30 million fine on the American cryptocurrency exchange Kraken. This occurred because they forgot to register the offer and sales of their crypto-staking schemes. Kraken nevertheless shut down all of its U.S. staking initiatives without making any comments about the allegations.
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