The US Securities and Exchange Commission has written a letter to crypto firm Paxos Trust Co. about a possible lawsuit complaint. According to WSJ report, the crypto firm has allegedly breached investor protection laws.
The regulatory agency sent a Wells notice, a letter that the agency sent before the lawsuit enforcement to inform companies or individuals. The notice states that Paxos issues and listed unregistered security, Binance USD. It is a stablecoin pegged with the dollar at a 1:1 ratio.
However, it is unclear yet whether the notice is issued against listing tokens or issuing tokens or both.
The spokesperson of Paxos company has refused to comment on the matter. Binance stated that it only holds the license rights of tokens as BUSD is issued and owned by Paxos.
The spokesperson of Binance stated that “Stablecoins are a critical safety net for investors seeking refuge from volatile markets and limiting their access would directly harm millions of people across the globe. We will continue to monitor the situation. Our global users have a wide array of stablecoins available to them.”
However, this matter may not turn into a lawsuit if Paxos provides a satisfactory response to the SEC in writing. The Well notice allows an accuser to prevent enforcement action by replying in an appropriate manner. The response was assessed by the agency’s commissioners and by voting they take decisions.
BUSD contains great dominance in the stablecoin market and holds the third position as the largest cryptocurrency. As per CoinGecko, BUSD is currently holding over a $16 billion market cap.
SEC has intensified its enforcement against crypto firms. Recently, the SEC has started an investigation of the leading cryptocurrency exchange, Kraken, for offering unregistered securities.
