Paxos disagrees categorically with the SEC about BUSD being a security

According to Paxos, it will work with the U.S. Securities and Exchange Commission on the matter and is prepared "to vigorously litigate if necessary."

The Paxos Trust Company says it “categorically disagrees” with Binance USD’s description by the United States Securities and Exchange Commission

The BUSD issuer confirmed in the Feb. 13 statement that it had received a Wells notice from the United States Securities and Exchange Commission regarding BUSD and its alleged failure to register the offering.

According to Paxos, BUSD does not qualify as a security under federal securities laws, as the SEC staff claims.

The firm noted it had received the notice on Feb. 3, adding that “there are unequivocally no other allegations against Paxos.”

“We will engage with the SEC staff on this issue and are prepared to vigorously litigate if necessary,” it added.

On Feb. 13, the New York Department of Financial Services (NYDFS) ordered Paxos to halt the issuance of BUSD.

Paxos says it will comply, tweeting on Feb. 13 that it will halt the minting new BUSD tokens effective Feb. 21.

However, Paxos has said BUSD will remain fully supported and redeemable to onboarded customers through at least February 2024.

”New and existing Paxos customers will be able to redeem their funds in US dollars or convert their BUSD tokens to Pax Dollar (USDP), a regulated US dollar-backed stablecoin also issued by Paxos Trust,” Paxos said.

New York State’s Department of Financial Services, or NYDFS, reportedly received a complaint from stablecoin issuer Circle regarding Binance’s reserves prior to its crackdown on BUSD.

Binance CEO Changpeng “CZ” Zhao says the exchange will continue to support BUSD despite issuer Paxos being ordered to stop minting the stablecoin by the U.S. SEC and New York regulators.