SEC LAWSUIT OVER BUSD TOKEN.

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It looks like SEC loves to top the headlines of our newsletter, as it continues to flex its regulatory muscles in the crypto space.

Now they are swinging hard against Binance, as part of their intensifying crypto enforcement campaign against major market participants.

Here’s what we got for you today on the topic :

1. Lawsuit Over Binance BUSD Token.

2. Ceasing Issuance of New BUSD Token.

3. Binance Dis-owns BUSD & Looks for Options.

4. BUSD Depegs & Crypto Community Baffled.

Let’s take a deep dive & see how they are taking their shot against BUSD.

Paxos Faces SEC Lawsuit Over Binance USD Token

The Securities and Exchange Commission (SEC) has informed Paxos Trust Co. of its plan to sue the company for violating investor protection laws.

The SEC enforcement staff has issued a Wells notice to Paxos, which the agency uses to inform companies of a possible enforcement action.

The notice alleges that Binance USD, a digital asset issued and listed by Paxos, is an unregistered security.

Binance USD is a Binance-branded stablecoin pegged to the dollar at a 1:1 ratio.

Firms that receive Wells notices are allowed to respond in writing and argue why the SEC shouldn't proceed with a lawsuit, which would require a vote by the SEC's five commissioners to authorize.

Paxos Terminates Partnership with Binance, Stops Minting BUSD.

Paxos announced the end of its relationship with Binance for the BUSD stablecoin brand. The decision, in close coordination with the New York Department of Financial Services, will take effect on February 21, 2023.

Paxos will continue to fully support BUSD and back all tokens 1:1 with US dollar reserves, held in segregated accounts.

Customers can redeem funds in US dollars or convert BUSD to Pax Dollar (USDP), another regulated US dollar-backed stablecoin.

Paxos remains committed to its goal of becoming the global leader in blockchain tokenization infrastructure and providing faster, safer, fairer, and more efficient financial systems.

Binance Dis-owns $BUSD, Looks for Options.

CZ, Founder of Binance stated : “BUSD, even though called Binance USD, is NOT issued or redeemed by Binance.”

• Binance will continue to use BUSD for the “foreseeable future,” while it does see users migrating to different stablecoins.

• The exchange is ready to adjust accordingly and could move away from using BUSD as the main pair for trading.

BUSD DEPEGS & COMMUNITY BAFFLED.

On Monday, BUSD experienced a dip to $0.9922 compared to rival stablecoin, Tether (USDT), on Binance.

CZ & Community Went Back to Need for Decentralized Stable Coin.

The news sparked various reactions from the crypto community. Crypto analyst Miles Deutscher argued that nobody expects profit when purchasing a stablecoin, while pseudonymous trader Tree of Alpha questioned how BUSD could be considered a security. Meanwhile, iTrader AshWSB dismissed the issue as "FUD" and suggested that BUSD is fully backed and Paxos not issuing any more tokens will not affect existing tokens. Bitcoin analyst Tedtalksmacro also suggested that the event may simply be "a shot at Binance."

Our Opinion On the Matter :

We spoke with several blockchain lawyers to determine if stablecoins can be considered securities. The lawyers pointed out that while stablecoins are designed to have a fixed value, they can still be profit-making instruments through arbitrage, hedging, and staking.

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