The Wall Street Journal (WSJ) has learned that the SEC sent a notice to Wells to Paxos Trust. This is a formal warning informing the recipient that the agency plans to take coercive action against them.. The notice is sent upon completion of an investigation into possible violations of securities laws or regulations.
Thus, Paxos has been formally charged by the regulator for violating securities laws.. It is noteworthy that for most investors, the stablecoin Binance USD (BUSD) is directly associated with Binance, despite the fact that this is a joint project of the cryptocurrency exchange and the trust company Paxos. In 2019, at the launch of the stablecoin, Binance stated:
“We are proud that our stablecoin allows trusted companies like Binance to offer products tailored to their users.”
However, now, against the backdrop of a possible legal investigation, Binance has disowned direct participation in the project.. A Binance spokesperson told the WSJ that BUSD is “a product issued and owned by Paxos” and that the exchange has merely licensed its trading brand.
An SEC spokesman declined to comment on the upcoming investigation.. By law, Paxos can challenge the SEC’s allegations within 30 days by providing the regulator with an extended report on its activities and the reasons that support the regulator’s allegations.. However, the final decision on the submission of materials to the judicial authorities remains with the SEC.
If the SEC takes its decision to court, and the judiciary takes the side of the regulator, then their conclusions will have long-term consequences not only for the company’s reputation, but also for the careers of Paxos leaders – from multimillion-dollar fines and a ban on the profession, up to criminal punishment.
Recall that last week, Paxos, which is the issuer of another stable coin, the Paxos Dollar (USDP), was investigated by the New York State Department of Financial Services (NYDFS).