Baystreet Staff
Stablecoin issuer Paxos says it will stop minting new Binance USD (BUSD) tokens after the U.S. Securities and Exchange Commission (SEC) threatened it with legal action.
It was widely reported over the weekend that the SEC plans to sue Paxos for selling BUSD as an unregistered security.
BUSD is a Binance-branded stablecoin pegged to the value of the U.S. dollar that is issued and managed by Paxos.
Following reports of the SEC’s potential legal action, Binance issued a written statement saying that it is reviewing BUSD and other products that could face regulatory actions.
For its part, Paxos issued a statement saying that it is ending its relationship with Binance for BUSD.
Following the weekend reports, more than $50 million of BUSD was sold on various exchanges in a 24-hour period, indicating a desire by users to turn the token into cash or transfer it to another stablecoin.
The price of BUSD fell sharply over the weekend to trade under $1 per token.
The SEC has moved to crackdown on cryptocurrencies, non-fungible tokens (NFTs), and stablecoins in recent months following the $8 billion U.S. collapse of crypto exchange FTX last November.
Last week, crypto exchange Kraken agreed to halt its staking service and pay a $30 million U.S. fine to the SEC for dealing in what the regulator called an unregulated security.
