Paxos in “Constructive Discussions” With SEC Over BUSD

Stablecoin issuer Paxos is continuing its discussion with the U.S. Securities and Exchange Commission (SEC) over the Binance USD (BUSD) stablecoin and the Wells notice, Reuters reported on 21 February.

The publication cited an internal email from Paxos’ CEO Chrales Cascarilla, who said the company is currently “engaged in constructive discussions” with the SEC over BUSD, and that it would continue to speak to the regulator in private. The executive further noted that Paxos continues to believe the the stablecoin should not be classified as security, and if necessary, “defend our position in litigation”.

Last week the company revealed it was facing a lawsuit from the SEC, which had sent it a Wells notice — a letter that informs companies of planned enforcement action — alleging that the BUSD stablecoin was an unregistered security. At the time, Paxos said it “categorically disagrees” with the SEC, and that it was prepared to “vigorously litigate” if necessary. The company had said in a press release:

“BUSD issued by Paxos is always backed 1:1 with US dollar-denominated reserves, fully segregated and held in bankruptcy remote accounts. We will engage with the SEC staff on this issue and are prepared to vigorously litigate if necessary.”

In a separate announcement, Paxos said it would be halting the issuance of new BUSD starting 21 February at the request of the New York Department of Financial Services (NYDFS). The company will, however, continue to support the stablecoin, and users will be able to redeem their funds in either Pax Dollar (USDP) or USD. Paxos also revealed it will be ending its relationship with the Binance crypto exchange, though Cascarilla noted that this decision was separate from the NYDFS and SEC investigations.