Breaking Paxos Terminates Partnership with Binance, Stops Minting BUSD

Paxos, the premier regulated blockchain and tokenization infrastructure provider, has announced that it will end its relationship with Binance for the BUSD stablecoin brand.

The decision, which comes in close coordination with the New York Department of Financial Services (NYDFS), will take effect on February 21, 2023.

Paxos Ends Relationship with Binance

Paxos maintains that customer safety has always been its top priority. And this will not change in the wake of the recent announcement, the firm said. BUSD stablecoin will continue to be fully supported by Paxos, with all BUSD tokens issued backed 1:1 with US dollar reserves, held in segregated accounts.

Paxos Trust Co., a regulated entity overseen by the NYDFS and audited by a top-four accounting firm, will continue to manage the BUSD dollar reserves.

For customers looking for alternative options, the stablecoin issuer will redeem funds in US dollars or convert BUSD tokens to the Pax Dollar (USDP), another regulated US dollar-backed stablecoin. This move will not impact Paxos’s ability to serve its customers, continue growing its staff or fund its business objectives.

In fact, the company is said to remain dedicated to becoming the global leader in blockchain tokenization infrastructure. It aims to continue providing faster, safer, fairer, and more efficient financial systems to global enterprises.

Regulatory Pressure on the Rise

Paxos has reportedly received a letter from the Securities and Exchange Commission (SEC) indicating that the agency intends to sue the company for violating investor protection laws. This move is part of the SEC’s growing campaign in crypto enforcement as the agency intensifies its focus on major players in the crypto market.

The SEC issued a Wells notice to Paxos, which is used to inform a company or an individual of a possible enforcement action.

According to sources familiar with the matter, the notice alleges that Binance USD, a digital asset that Paxos issues and lists, is an unregistered security. Binance and Paxos announced the partnership to launch BUSD in 2019, and the digital asset exchange run by Paxos, itBit, also lists BUSD, along side many other crypto exchanges.

The specific details of the SEC notice are unclear, as it couldn’t be determined if it is related to Paxos’ issuing of the coin, the listing of the coin, or both. When asked for comment, a Paxos company spokesperson stated, “Paxos is not commenting on any individual matter.”

Binance has noted that BUSD is issued and owned by Paxos and that Binance only licenses its brand. In a statement, Binance said, “We will continue to monitor the situation.”

Firms that receive Wells notices can respond in writing and explain to the SEC why it should not proceed with a lawsuit. The SEC’s five commissioners must vote to authorize any enforcement settlement or litigation, and a Wells notice is not a final indication that the SEC will take enforcement action.

‘Stablecoin’ BUSD Depegs

The Binance-branded stablecoin, BUSD, faced a turbulent shift in value as regulators took action against its issuer, Paxos.

On Monday, BUSD, which aims to keep a one-to-one value with the US dollar, experienced a dip to $0.9922 compared to rival stablecoin, Tether (USDT), on Binance, as per data from BeInCrypto.

Source: BeInCrypto

This deviation from its intended value came following the New York Department of Financial Services’ order for Paxos, which both issues and lists BUSD, to halt any additional minting of its tokens.


BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.

Bookmark (0)
ClosePlease loginn

Related Posts

Bitcoin: The Best Performing Asset Class in Q1 2023

Bitcoin set for its best trading quarter in nearly 2-years.
The top cryptocurrency vastly outpaces stocks performance.
BTC is well placed for more gains in Q2 2023.

Bookmark (0)
ClosePlease loginn

USDC Supply Shrinks by $10 Billion in March, But Hits 6-Month High on Smart Contracts

USDC supply declined by $10 billion in March following its exposure to the US banking crisis.
However, the stablecoin use on smart contracts reached a six-month high of 42.08%.
Tether USDT is now the dominant stablecoin, accounting for over 60% of the market.

Bookmark (0)
ClosePlease loginn

Bittrex Quits US, Cites Unfavorable Regulatory Environment

Crypto exchange Bittrex said it was leaving the United States because of the regulatory environment.
The crypto company had had previous skirmishes with financial regulator in the country.
Crypto stakeholders have warned that the US regulatory landscape would force many firms out of the country.

Bookmark (0)
ClosePlease loginn

Solana overcomes FTX fiasco — SOL price gains 100% in Q1

The cryptocurrency market may have overreacted to Solana’s FTX links and its tainted boss, Sam Bankman-Fried.

Bookmark (0)
ClosePlease loginn

Elon Musk requests dismissal of $258B Dogecoin lawsuit: Report

The plaintiff’s brought up Musk’s Saturday Night Live appearance in 2021, where he portrayed “a fictitious financial expert” and called Dogecoin “a hustle,” resulting in a steep price decline minutes later.

Bookmark (0)
ClosePlease loginn

Here’s how the crypto industry is using artificial intelligence

The rise of artificial intelligence, though in its early stages, has found use cases in crypto through countless projects.

Bookmark (0)
ClosePlease loginn

Leave a Reply

Your email address will not be published. Required fields are marked *