Paxos, a BUSD stablecoin holder, has ended its relationship with Binance while it engages with the U.S Securities and Exchange Commission (SEC), over a recent Wells Notice.
Charles Cascarilla, CEO of Paxos, confirmed today that Binance has ended their relationship with the stablecoin issuer due to misaligned objectives.
Paxos CEO: Binance Relationship Diverges from ‘Strategic Priorities”
Axios has obtained an internal email from the Paxos chief, which Axios reviewed. He stated that the market has changed and that the Binance relationship does not align with our current strategic priorities.
He said that the decision was not related to recent regulatory shakeups by New York Department of Financial Services or the SEC. However, the NYFSD recently ordered Paxos stop minting the Binance-branded BUSD stabilitycoin. The SEC also issued a Wells Notice to the firm, claiming that BUSD was, in its view, an unregistered security.
Investors redeemed $2.8billion worth of BUSD via Paxos following the NYFSD order. Curve, a decentralized exchange, saw an increase in BUSD and a decrease in Tether liquidity due to investors selling Binance-branded coins.
Paxos is also in private discussions with SEC, despite not agreeing with their findings. BUSD holders were reassured by Cascarilla that Paxos would honor BUSD redeemables until February 2024.
SEC Commissioner Calls Recent Enforcement Action ‘Unimaginative’
In response to the SEC’s enforcement actions against crypto companies, including BlockFi and Genesis, Hester Peirce, SEC Commissioner, said in a recent interview that she disagrees the SEC’s method of bringing bad actors to justice.
Instead, she suggests a new approach that would satisfy securities laws and register investors.
She said that individual service providers could register and then deal with the unique aspects their programs during the registration process. This means that each registrant would be asked the same generic questions before discussing any new product features.
She noted that this is a better way than bringing up the issue with enforcement actions. She argues that investor programs should not be used to shut down programs so that a particular demographic cannot access them.
She stressed that her opinions were hers and not those of the SEC.
Peirce is among five commissioners that vote on rules the SEC drafts based upon existing securities laws. Gary Gensler, SEC Chair, sets the agency’s rulesmaking agenda. Through a democratic vote, the five commissioners also decide whether enforcement or settlement actions should be taken.
My thoughts on today’s Kraken settlement: https://t.co/mijt3MNN4U– Hester Peirce (@HesterPeirce) February 9, 2023
Peirce recently disavowed the SEC’s enforcement action against crypto exchange Kraken, but clarified that her description describing the agency as “a paternalistic regulator” didn’t apply to any individual in the SEC.
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BeInCrypto reached out to the company or individual involved in this story to obtain an official statement on the latest developments. However, it has not heard back.
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