Paxos Trust Company says it “categorically disagrees” with the United States securities regulator that has described Binance USD (BUSD) as a security.
In the Feb. 13 statement, the BUSD issuer confirmed recent reports that it had received a Wells notice from the United States Securities and Exchange Commission over BUSD and its alleged failure to register the offering under federal securities laws.
“Paxos categorically disagrees with the SEC staff because BUSD is not a security under the federal securities laws,” Paxos said.
The firm noted it had received the notice on Feb. 3, adding that “there are unequivocally no other allegations against Paxos.”
“We will engage with the SEC staff on this issue and are prepared to vigorously litigate if necessary,” it added.
On Feb. 13, the New York Department of Financial Services (NYDFS) ordered Paxos to halt the issuance of BUSD.
However, Paxos has said BUSD will remain fully supported and redeemable to onboarded customers through at least February 2024.
”New and existing Paxos customers will be able to redeem their funds in US dollars or convert their BUSD tokens to Pax Dollar (USDP), a regulated US dollar-backed stablecoin also issued by Paxos Trust,” Paxos said.
New York State’s Department of Financial Services, or NYDFS, reportedly received a complaint from stablecoin issuer Circle regarding Binance’s reserves prior to its crackdown on BUSD.
Binance CEO Changpeng “CZ” Zhao says the exchange will continue to support BUSD despite issuer Paxos being ordered to stop minting the stablecoin by the U.S. SEC and New York regulators.