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On the evening of July 11, the US Securities and Exchange Commission (SEC) suddenly stopped investigating Paxos, the issuer of BUSD, and removed it from the securities list. This is considered a new step in the cryptocurrency technology industry.
HOW DID PAXOS ESCAPE THE SEC?
Accordingly, US officials decided to end the charges against Paxos from February 2023 and made no enforcement recommendations. Jorge Tenreiro, Deputy Director of the SEC’s Cryptoassets and Networks Unit, confirmed the news.
Today’s action marks an important step forward for the cryptocurrency technology industry, especially amid the dispute over whether stablecoins should be considered securities.
The SEC’s withdrawal is also said to reflect the impact of a recent court ruling in favor of Binance, which determined that secondary market BNB purchases were not securities, similar to the ruling in mid-2023 regarding the lawsuit between the SEC and Ripple.
Paxos representative Walter Hessert said:
“We are delighted with the decision to close this investigation. This ruling could open up new opportunities, encouraging large enterprises to further explore the stablecoin sector.”
The legal debate lasted more than a year, starting with the New York government on February 10, 2023. Two days later, Paxos officially received a notice from the SEC, alleging that BUSD could be considered a security. Paxos was asked to stop issuing BUSD, which led to the decision to stop cooperating with the Binance exchange – at that time BUSD was an integral part of the operations of the world’s largest cryptocurrency exchange.
As a result, Paxos had to burn 700 million BUSD, a decision from Binance, CEO Changpeng Zhao and the crypto community to gradually withdraw and stop working with this stablecoin.
Notably, Binance removed BUSD trading pairs late last year and introduced the new stablecoin FDUSD. However, the SEC continues to investigate lawsuits related to Coinbase, Binance, Kraken, and blockchain infrastructure developer Consensys, warning DEX Uniswap and imposing a fine of $4.47 billion on Do Kwon and Terraform Labs.
