Paxos ends Binance relationship amid SEC discussions

BUSD stablecoin issuer Paxos has terminated its relationship with Binance as it engages in negotiations with the US Securities and Exchange Commission (SEC) over the recent Wells notice.

Paxos CEO Charles Cascarilla confirmed today that the stablecoin issuer terminated its relationship with Binance due to the wrong goals.

Paxos CEO says relationship with Binance separate from ‘strategic priorities’

“The market has evolved and the Binance relationship is no longer in line with our current strategic priorities,” the Paxos chief said, according to an internal email seen by Axios.

He added that the decision was unrelated to the recent regulatory shake-up by the New York Department of Financial Services and the SEC, with the NYFSD recently ordering Paxos to sever ties with Binance, mining the Binance-branded BUSD stablecoin. was closed. At the same time, the SEC issued a Wells notice to the firm, alleging that in the agency’s view, BUSD is an unregistered security.

Following the NYFSD order, investors redeemed $2.8 billion in BUSD via Paxos. The decentralized exchange curve shows an influx of BUSD and a decrease in Tether liquidity as investors abandon the Binance-branded coin.

Paxos has also engaged in private discussions with the SEC, despite disagreeing with the agency’s findings. Cascarilla assured BUSD holders that Paxos will honor BUSD redemptions until at least February 2024.

SEC Commissioner Calls Recent Enforcement Action ‘Unthinkable’

Following the SEC’s enforcement actions against crypto firms, including BlockFi, Genesis, and Kraken, SEC Commissioner Hester Peirce recently said in an interview with Frank Chaparro that she is open to the SEC’s way of bringing bad crypto actors to book. disagree.

Instead, she suggests a different approach that involves a registration process that satisfies securities laws may better serve investors.

“Individual service providers can come in and register, and then in the process of registering, deal with the unique aspects of their programs,” she said. In other words, each registrant will answer general questions “equally” before discussing any new product features.

“It’s a better approach than coming up with enforcement action after the fact,” she said. If investor programs are only about shutting down programs a certain demographic the program can’t reach, “that’s a very unimaginative form of investor protection,” she argues.

All opinions expressed were his own and not those of the SEC, he stressed.

Peirce is one of five commissioners who vote on the SEC’s draft rules based on existing securities laws. SEC Chairman Gary Gensler set the agency’s rulemaking agenda. The five commissioners also decide on enforcement or settlement actions through a democratic vote.

Pierce disagreed with the SEC’s recent enforcement action against crypto exchange Kraken but clarified that his description of the agency as “a patriarchal and lazy regulator” does not apply to anyone within the SEC.

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BeInCrypto has reached out to the company or the person involved in the story for an official statement regarding the recent development, but has yet to hear back.

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