SEC Warns Paxos of Enforcement Action, Reports Say

The U.S. Securities and Exchange Commission (SEC) plans to sue the crypto firm Paxos over its role in issuing the Binance USD (BUSD) stablecoin, according to The Wall Street Journal, citing sources familiar with the matter.

According to the publication, SEC staff sent the firm a letter to file suit regarding the issuance and listing of BUSD.

The regulator’s notice asserts that the digital asset is a security.

In 2019 Paxos and Binance announced a partnership to launch BUSD. At the time of writing, the coin is the third-largest stablecoin by market capitalization, behind USDT and USDC, with a market cap of $16.2 billion (CoinGecko).

The directed notice to the company does not necessarily mean the regulator will file a lawsuit. Such a decision would require the approval of five SEC commissioners.

Paxos is the issuer of its own stablecoin — Pax Dollar (USDP).

Earlier, the New York State Department of Financial Services began began an investigation into the company.