Stablecoin issuer Paxos will stop minting new Binance USD (BUSD) tokens following the threat of legal action from the U.S. Securities and Exchange Commission (SEC).
BUSD is a Binance-branded stablecoin issued and managed by Paxos. Following the news of the SEC’s legal action, Binance issued a statement that it would be reviewing projects in uncertain markets where regulatory uncertainty could cause detriments to its users.
The NYDFS said that it had instructed Paxos to cease minting BUSD due to several unresolved issues related to Paxos’ oversight of its relationship with Binance. Paxos said it is ending its relationship with Binance for BUSD.
“The Department is monitoring Paxos closely to verify that the company can facilitate redemptions in an orderly fashion subject to enhanced, risk-based, compliance protocols,” NYDFS said in a statement.
Following Sunday’s news, some $52 million of BUSD were sent to exchanges in a 24-hour period, indicating a desire, as per data by CryptoQuant, indicating a desire by users to turn them into fiat or other stablecoins.
In the past 24 hours, BNB Chain’s native token slid over 7% while BUSD saw massive inflows to crypto exchanges.
UPDATE (Feb. 13, 11: 40 UTC): Adds statement from NYDFS and additional background.
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