The New York State Department of Financial Services (NYDFS) has ordered Paxos Trust to stop issuing new Binance USD (BUSD) tokens, The Wall Street Journal (WSJ) reports, citing Binance.
At the same time, Paxos will continue to manage the redemption of the BUSD token.
BUSD is a Binance-branded stablecoin pegged to the US dollar. Paxos and Binance released it in 2019, having received NYDFS approval for this. According to CoinGecko, the asset has a market capitalization of $1.6 billion, according to this indicator, it ranks 7th among all cryptocurrencies and third among stablecoins after USDT and USDC.
Last week it became known that the New York regulator is investigating Paxos. The regulator did not disclose the purpose of the audit and declined to comment on this issue, noting only that it constantly studies the activities of supervised organizations to identify the risks of consumers and institutions associated with the volatility of the crypto market.
The US Securities and Exchange Commission (SEC) is also looking into Paxos’ activities. She told the stablecoin issuer that she plans to sue him for violating investor protection laws. According to the SEC, the BUSD stablecoin is an unregistered security.
In early February, the SEC announced its work priorities for 2023, among which the area of crypto assets was especially noted. The commission said it would increase its oversight of the crypto industry in 2023.