The Circle company, which issues the stablecoin USDC, may be behind the hunt for Binance USD (BUSD), issued by Paxos in the United States. According to Bloomberg Law, a filed complaint led to the currency’s warning.
When Circle’s complaint about possible fund mismanagement came to the attention of the New York Department of Financial Services, the situation may have led to the warning against the stablecoin BUSD.
It is worth remembering that Paxos was ordered to stop issuing Binance USD to the market last Monday (13).
Issuer USDC has turned over Binance USD to regulators, Bloomberg reveals
According to documents obtained by Bloomberg Law, Circle accused Binance USD of not holding any concrete reserves in the issuance of its stablecoin, conducted by Paxos.
The warning is said to be based on a BUSD blockchain analysis, in which Circle analysts revealed the issue to the New York agency.
In a public release following the release of a statement, the Department of Financial Services stated that Paxos is required to allow BUSD redemption to anyone who owns the token.
“Paxos is required to exchange its Paxos-issued BUSD tokens for US dollars through Paxos at a 1:1 exchange rate in accordance with compliance protocols for customers in good standing.”
Despite Circle’s possible statement against Paxos to the regulator, the USDC issuing company declined to comment on the matter. It is worth remembering that USDC lost space in the market after Binance changed its policy with stablecoins in 2022.
In contrast, Binance said it is already looking to resolve the situation and looking for another company to issue its stablecoin.
What did Paxos say?
Last Monday, after the SEC announced the lawsuit against Paxos involving Binance USD, the US-regulated company disagreed with the measures.
For example, he stated that he will contact the regulator and possibly even go to court to mediate in a dispute between the parties.
“Paxos categorically disagrees with SEC personnel on the grounds that BUSD is not a security under federal securities law. This SEC Wells notice pertains only to BUSD. To be clear, there are unequivocally no other charges against Paxos. Paxos has always prioritized the security of its clients’ assets. BUSD issued by Paxos is always backed 1:1 with US dollar-denominated reserves, fully segregated and held in remote bankruptcy accounts. We will engage SEC staff on this and are prepared to vigorously litigate if necessary.”
Since 2022, regulators have been concerned about stablecoins in the market, especially after the Earth Collapse (LUNA).
Source: Live Coins
Barry Siefert is an accomplished journalist and author at The Nation View. He is known for his expertise in the field of cryptocurrency, and has written extensively on the topic. With a background in finance and economics, Barry has a deep understanding of the underlying technology and market forces that drive the crypto industry.
