On Saturday, the Security and Exchange Commission sent a Wells notice to Paxos for transacting unregistered security, BUSD. Now, Paxos responded on notice by releasing a statement, refuting allegations by SEC staff.
In a press release, Paxos stated that it “ categorically disagrees” with the SEC as BUSD is not the security tied to the federal securities laws. Paxos made clear that the notice is only applied to BUSD.
A full statement reads as follows: “Paxos categorically disagrees with the SEC staff because BUSD is not a security under federal securities laws. This SEC Wells notice pertains only to BUSD. To be clear, there are unequivocally no other allegations against Paxos. Paxos has always prioritized the safety of its customers’ assets. BUSD issued by Paxos is always backed 1:1 with US dollar-denominated reserves, fully segregated and held in bankruptcy remote accounts. We will engage with the SEC staff on this issue and are prepared to vigorously litigate if necessary.”
Furthermore, Paxos announced a halt on issuing new BUSD tokens from Feb 21 to follow the order from the New York Department of Financial Services.
BUSD is the fiat-backed stablecoin, pegged with the US dollar into a 1:1 ratio. Amid continuous regulatory scrutiny and law enforcement action, BUSD fell under its pegged value to $0.9950. It sparked panic among BUSD holders that led to the transfer of tokens into other stablecoins.
Also Read: BUSD depegs after NYDFS Orders Paxos to Stop Issuing Tokens
