Paxos confirmed Monday it received a Wells Notice from the Securities and Exchange Commission, stating it’s prepared to take on the agency and any enforcement actions related to stablecoin Binance USD.
A Wells Notice is an official letter from the SEC that informs recipients the agency is preparing to bring a potential enforcement action against them. Paxos received notice from the SEC that the agency is considering enforcement action against the company for not registering BUSD as a security, the company stated.
Paxos disagreed with the SEC’s belief that its Binance USD token is a security, stating that it is prepared to “vigorously litigate” the disagreement if it’s forced to.
“Paxos categorically disagrees with the SEC staff because BUSD is not a security under the federal securities laws,” the company said in a statement. “To be clear, there are unequivocally no other allegations against Paxos.”
The statement from Paxos comes as the company announced it would stop minting any new BUSD, a stablecoin issued by the company that’s pegged to the value of the dollar and issued under a licensing agreement with Binance, the largest cryptocurrency exchange.
Paxos said that it would “end its relationship with Binance” in a statement released Monday. The company assured customers that while its relationship with Binance is winding down, customers would still be able to redeem the stablecoin for at least a year.
This story is developing and will be updated.
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