SEC Clears Paxos’ BUSD Stablecoin in Regulatory Probe

SEC Clears Paxos' BUSD Stablecoin in Regulatory Probe

In Summary

SEC Ends Investigation: The SEC won’t take action against Paxos’ BUSD stablecoin.
Dispute Over Status: Investigation focused on if BUSD is a security under US law.
Positive Outcome for Paxos: This validates Paxos’ claim that BUSD isn’t a security.


NEW YORK–Friday, July 12, 2024-The Securities and Exchange Commission (SEC) has concluded its investigation into Paxos’ stablecoin, Binance USD (BUSD), without pursuing any enforcement action, according to a media Statement released by Paxos yesterday.

The Paxos Statement can be read here.

Paxos has posted an image of the SEC letter as support for their claim on it Platform X account. 1

However, the URL link provided by the SEC leading to SEC Letter returns a 404 error.

According to initial reports Acting Chief of the SEC’s Crypto Assets and Cyber Unit, Jorge Tenreiro, notified Paxos on July 9 that he did not plan to recommend enforcement action, according to a letter obtained by Fortune,” the Fortune reported a while ago.2

This decision follows over a year after the SEC issued Paxos a Wells Notice—a letter indicating potential enforcement action—related to the BUSD stablecoin issued in collaboration with Binance.

This decision resolves months of uncertainty surrounding BUSD’s legal status. The SEC’s investigation focused on whether the dollar-pegged stablecoin could be classified as a security under federal law.

Below is thethe letter from the SEC:

UNITED STATES SECURITIES AND EXCHANGE COMMISSION DIVISION OF ENFORCEMENT

July 9, 2024

VIA EMAIL ([email protected])

Paxos Trust Company, LLC c/o Robert A. Cohen Davis Polk & Wardwell LLP 901 15’h Street, NW Washington, DC 20005

Re: In the Matter of Binance USD (110-14376)

Dear Paxos Trust Company, LLC:

We have concluded the investigation as to Paxos Trust Company, LLC. Based on the information we have as of this date, we do not intend to recommend an enforcement action by the Commission against Paxos Trust Company, LLC. We are providing this notice under the guidelines set out in the final paragraph of Securities Act Release No. 5310, which states in part that the notice “must in no way be construed as indicating that the party has been exonerated or that no action may ultimately result from the staff’s investigation.” (The full text of Release No. 5310 can be found at: http://www.sec.gov/divisions/enforce/wells-release.pdf.)

Sources
  1. X.com: https://x.com/Paxos/status/1811405877733097703/photo/1[↩]
  2. fortune.com: https://fortune.com/crypto/2024/07/11/sec-busd-gary-gensler-paxos-stablecoin-binance/[↩]
Protected by Copyscape