After the news that the US Securities and Exchange Commission (SEC) intends to sue the issuer Paxos for determining that the stablecoin Binance USD (BUSD) is an “unregistered security” earlier today (13th), the incident has made new progress. Cryptocurrency exchange Binance noted that Paxos has been instructed to stop minting new BUSD.
According to reports, BUSD is a stable currency jointly established by Paxos and Binance. Paxos issues BUSD (ERC-20) on the Ethereum blockchain, but on the other hand, Binance also provides BUSD-linked tokens on the Binance chain. Binance-Peg BUSD (BEP-20) Token.
BUSD, currently the third-largest stablecoin with a market cap of more than $16 billion, fell as low as $0.996078 earlier today.
A Binance spokesperson said in a statement on Monday:
Paxos informed us that the New York State Department of Financial Services has directed them to stop minting new BUSD.
“BUSD is a stablecoin wholly owned and managed by Paxos. As such, the BUSD market capitalization will only decline over time. Paxos will continue to service the product, manage redemptions, and will Additional information to follow. Paxos also guarantees that funds are safe and fully backed by their bank’s reserves.”
In response to the news that the US SEC plans to sue Paxos, Binance CEO Changpeng Zhao (CZ) responded, “Although BUSD is called Binance USD, it is not issued or redeemed by Binance.”