A report from Bloomberg media disclosed that a year ago Circle complained about Paxos’ BUSD mismanagement and that past complaint against Paxos emerged as a very big hurdle for Binance & Paxos.
On 10 Feb 2023, The United States Securities and Exchange Commission (SEC) sent a Wells notice to Paxos to confirm that SEC considered its BUSD stablecoin as an unregistered security. The New York’ financial regulatory body NYDFS also ordered Paxos to stop minting new BUSD stablecoins.
Many experts in the crypto industry shared their opinion on this matter in their ways but the whole thing raised a single question: why did the SEC sent Wells notice to Paxos only for its BUSD stablecoin despite SEC is aware that Paxos provides two stablecoins in the crypto market BUSD & USDP?
Paxos manages both the stablecoins under the same systematic process to ensure the safety of the crypto traders and maintain the value of BUSD & USDP stablecoin always pegged to 1:1 US dollar.
Recently Bloomberg reported that around a year ago USDC stablecoin issuer Circle filed a complaint against Paxos’ BUSD stablecoin. According to Circle, Binance failed to manage the reserves perfectly.
The NYDFS agency responded on the whole matter and confirmed that regulatory action on Paxos’ BUSD stablecoin was taken because of several factors and one of which includes unresolved issues of Paxos’ relationship with the Binance crypto exchange.
These things confirmed that whole regulatory hurdles arose in the crypto industry because of the internal fight among the stablecoin companies.
Paxos & Binance against regulatory action
Paxos team confirmed that its team fully disagrees with the SEC claims and now the company will engage with the SEC agency to talk on this matter to clear their misunderstanding about BUSD stablecoin.
Binance exchange CEO Changpeng Zhao (CZ) clearly said that BUSD is fully a Paxos-owned stablecoin and everything is in the hands of Paxos company.
CZ confirmed that he will keep helping Paxos & BUSD holders and also said that Binance will shift to other best stablecoin if SEC will prove BUSD a security asset.