The New York State Department of Financial Services, or NYDFS, reportedly received a complaint from stablecoin issuer Circle regarding Binance’s reserves prior to its BUSD crackdown.
According to a February 13 Bloomberg report, Circle warned In the fall of 2022, the NYDFS complained that Binance’s reserves were not enough to back its tokens, apparently including the Binance USD (BUSD) stablecoin. A person familiar with the matter is reported to have said that the Circle team disclosed the information through blockchain data.
Circle’s action preceded plans by the US Securities and Exchange Commission to file a lawsuit against Paxos, alleging that BUSD is an unregistered security. On Feb. 13, the NYDFS announced its own regulatory ruling, ordering Paxos to “stop minting Paxos-issued BUSD” and reiterating its requirements for tokens under its regime to be fully backed by cash or cash equivalents.
In a Feb. 13 filing in response to the SEC Paxos lawsuit said BUSD is not a security under federal securities laws, adding:
“BUSD issued by Paxos is always backed 1:1 by USD-denominated reserves, fully segregated and held in remote bankruptcy accounts. We will engage with SEC staff on this matter and stand ready for vigorous litigation if needed.”
Paxos released the following statement on February 13th. Read the full text of the statement here: https://t.co/jbfcBAiCgf pic.twitter.com/T7k80QtKyX
— Paxos (@PaxosGlobal) February 13, 2023
NYC Financial Regulator Investigates Gemini Over FDIC Claims: Report
The crypto regulatory action was the latest in the United States to affect crypto firms as the SEC reached an agreement with Kraken to end its staking services for US users. The financial regulator also continues to be involved in the XRP lawsuit with Ripple, claiming that the tokens are securities in its jurisdiction.
Credit : cointelegraph.com
