Paxos Trust Co. gets Wells notice from SEC over BUSD token
It happens to be the Securities and Exchange Commission (SEC) that has duly informed the crypto company, Paxos Trust Co., which happens to be a crypto firm, that it is contemplating suing the company. This is with regard to its suspicion of the entity having violated investor protection laws. As per information from reliable sources, this happens to be in accordance with the SEC’s ongoing campaign involving the enforcement of crypto.
In this regard, the enforcement staff of SEC has sent out an official letter, also known as a Wells notice, to Paxos, which happens to be as per the norms and procedures the agency adopts. This very notice makes the allegation that the digital asset that is issued and listed by Paxos, going by the name of Binance USD, happens to be a security that has not been duly registered. It also happens to be a matter of fact that the Wells notices are not in any way a finality. The firms have the option of first expressing their own point of view.
BUSD happens to be a Binance-branded stablecoin that has a one-to-one relation with the dollar. It was in the year 2019 that Binance, along with Paxos, had seemingly declared their merging and, correspondingly, the stablecoin’s launch. It also happens that Paxos handled digital asset exchange itBit, which also lists BUSD. It further happens to be listed by other agencies too. Regarding all of this, Paxos is yet to make any disclosure of any sort. However, Binance happens to have stated that the BUSD is not only issued by Paxos but also owned by it and that it only licenses the brand.
In the meantime, the SEC has kept itself actively engaged with its crypto enforcement, and its main target is the prime market participants. Only recently, the Kraken platform suspended the provision of crypto staking services, along with having paid a penalty amount of $30 million to SEC. Lately, however, The SEC has not actually indulged in acting against any stablecoin user. It is only now and with the expansion of its enforcement team, that it is now looking into the crypto market, wherein the target would be the stablecoins.
Issuers of stablecoin have a good thing going for themselves with the help of making investments of user deposits in the form of cash or cash equivalent assets. The BUSD, in the present scenario, happens to have achieved the distinction of being the third biggest stablecoin, boasting a market cap of BUSD positioned at more than $16 billion. Paxos, on its part, also happens to be issuing its own stablecoin, Pax Dollar, which has a market cap of approximately $897 million. According to the Chairman of SEC, Gary Gensler, stablecoins can be looked at as bank deposits, or for that matter, money-market mutual funds.
For the last six years, the SEC has happened to have acted against many digital tokens. In its opinion, these kinds of assets first need to be duly registered with the agency, following which they are permitted to be sold to the public at large. In the case of registration, it is required that complete financial and risk disclosures be made in order for investors to make the right decisions.