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Binance CEO Changpeng Zhao Reacts to BUSD Ban
Binance CEO Changpeng Zhao (CZ) has reacted to the ban on BUSD issuer Paxos by the New York Department of Financial Services (NYDFS), saying that the Binance exchange will continue to support BUSD.
#BUSD. A thread. 1/8
In summary, BUSD is issued and redeemed by Paxos. And funds are #SAFU!
— CZ 🔶 Binance (@cz_binance) February 13, 2023
On Feb 13, the NYDFS ordered crypto firm Paxos to stop minting the stablecoin following the allegation raised by the United States Securities and Exchange Commission (SEC) that BUSD is an unregistered security.
While CZ established the claim that BUSD is wholly owned and managed by Paxos, he assures all users that funds are safe because they are fully covered by reserves in Paxos’s bank.
However, CZ expresses doubt over the classification of BUSD as securities, stressing that if the judgement holds sway it would have profound impacts on how the crypto industry will evolve in such jurisdiction.
He reiterated Binance’s position on the development, emphasizing that Binance will continue to support BUSD for the foreseeable future. He equally envisages the possibility of users migrating to other stablecoins, stressing that the exchange will position itself for that.
Amidst the uncertainty and regulatory clampdown on crypto firms, CZ stated that it would be reviewing other projects within jurisdictions where laws are made to ensure that users are protected from any undue harm.
Crypto Community Shocked by Ban on BUSD Issuer, Paxos
The ban on BUSD issuer Paxos by the New York Department of Financial Services (NYDFS) came to many crypto users as a surprise. Crypto analyst, Miles Deutscher, queried how BUSD without an expectation of profit could be classified as an unregistered security.
The SEC has labelled BUSD as an “unregistered security”, and is suing its issuer, Paxos.
But how on earth is a STABLECOIN considered a security, when it clearly doesn’t meet the Howey Test criteria.
No one has ever had “the expectation of profit” when buying $BUSD. pic.twitter.com/QXOlDUyvc3
— Miles Deutscher (@milesdeutscher) February 13, 2023
In the same vein, Binance CEO CZ remarked that he is not an expert on US laws but is particularly surprised by the development. He thus pitched side with Miles on the matter.
5/ On the alleged SEC vs Paxos lawsuit, I have no information about it, other than public news articles. The lawsuit is between the US SEC & Paxos.
I am not an expert on US laws. But personally, I agree with Mile’s logic here (not that it means much): https://t.co/b8H3bjLAoy
— CZ 🔶 Binance (@cz_binance) February 13, 2023
Meanwhile, a user Dan Gerchcovich tweeted that Binance should contest the decision and must win. Otherwise, it would have overbearing negative effects on the entire crypto industry.
Given the series of clampdowns by the SEC in recent times, crypto firms should not only sit tight but must review their framework of operations to ensure that they are adhering to SEC laws.
