SEC drops case against Paxos over claiming BUSD is an unregistered security

In February 2023, the U.S. Securities and Exchange Commission (SEC) planned to sue Paxos Trust Company over Binance USD (BUSD) as an unregistered security.

The SEC's claim is that BUSD qualifies as an unregistered security, which Paxos disputes, stating that BUSD is not a security under federal securities laws and that it is prepared to fight the lawsuit vigorously​.

In response to the regulatory pressure, Paxos has halted the minting of new BUSD tokens.

However, Paxos assures that existing BUSD tokens are fully backed by U.S. dollar-denominated reserves and remain redeemable through Paxos Trust Company​​.

This action is part of a regulatory crackdown on the crypto industry by the SEC.

Paxos on X: "“Paxos prevails in SEC investigation of BUSD stablecoin” 👏 On Tuesday, we received a formal termination notice from the SEC stating that it will not recommend enforcement action against Paxos Trust Company in the investigation of Binance USD (BUSD). 

On July 9, 2024, the U.S. Securities and Exchange Commission (SEC) has concluded its investigation into Paxos and the Binance USD (BUSD) stablecoin.

The SEC decided not to pursue any enforcement action against Paxos and BUSD.

Paxos, the issuer of BUSD stablecoin, has maintained that its USD-backed stablecoins are not securities under federal securities laws, and this outcome seems to support their stance.