Paxos to halt Binance USD issuance after SEC lawsuit

Paxos, a regulated blockchain firm, is facing pressure from US financial regulators to stop issuing US Dollar-pegged stablecoins. The firm announced the rollback of Binance USD issuance and stated that it will continue to honor redemptions of BUSD. 

Also read: Breaking: SEC to sue stablecoin issuer Paxos over Binance USD

Paxos to stop issuing its largest US Dollar-pegged stablecoin

Paxos made the decision to pull the plug on US-Dollar backed stablecoin BUSD after threats of a lawsuit from the  US Securities and Exchange Commission. The financial regulator has announced that it will continue to manage redemptions of BUSD. 

BUSD is one of the largest US Dollar-pegged stablecoins in the crypto ecosystem. As the SEC’s clampdown on the cryptocurrency market widens, regulators directed Paxos to halt the issuance of BUSD. 

The New York Department of Financial Services pulled the plug on BUSD’s creation, as regulators consider Binance’s stablecoin an unregistered security. Paxos is the SEC’s latest target after the regulator hit cryptocurrency exchange Kraken with a lawsuit for its “staking-as-a-service.” The exchange halted the service and settled the lawsuit, paying $30 million in fines to the regulator. 

BUSD held steady at $1 parity, despite the latest developments surrounding its controversial issuance. 

Binance spokesperson affirms that BUSD redemptions will be honored

A spokesperson for the world’s largest cryptocurrency exchange Binance said that BUSD is a “Paxos issued and owned product,” with Binance licensing its brand to the firm. Paxos is regulated by the New York Department of Financial Services and BUSD is backed one to one against the US Dollar. 

The Binance representative assured BUSD holders that they will continue to monitor the situation and the exchange platform’s users will have an array of stablecoins available to them. 

Read more about the SEC’s notice issued to Paxos here.