Binance stablecoin (BUSD) issuer company Paxos has finally broken the silence on the U.S. Securities and Exchange Commission’s (SEC) ban on its stablecoin, arguing that the decision was misplaced and would be litigated as per a report.
According to a Feb. 13 statement, Paxos established the claim that it has halted the minting of new BUSD tokens effective Feb. 21 following the BUSD Ban by the New York Department of Financial Services (NYDFS).
The imposition was made after the US SEC served Paxos a Wells notice, stating that it failed to register the offering under federal securities laws.
Meanwhile, Paxos maintained that it will continue to manage all outstanding BUSD reserves with utmost assurance that all BUSD are fully backed 1:1 alongside US dollar-denominated reserves.
Paxos explained that the allegation raised by the U.S. SEC is unfounded because BUSD cannot be classified as a security. It further stated that it will engage with the SEC staff on the issue via litigation.
BUSD Ban Aided Net Outflows from Binance Exchange
While Binance is not the owner and issuer of BUSD, the latest development has negatively affected the exchange as it recorded over $788 million net outflow within 24 hours that the ban was imposed according to blockchain platform Nansen.
However, Dune analytics data revealed that the withdrawal was the largest 24-hour net outflow since Dec. 17 when Binance’s proof-of-reserve became a subject of public concern.
In light of the new development, Binance exchange maintained that “Funds are SAFU.” Recall that Binance recorded a withdrawal of more than $1 billion within 12 hours last year without any hassle.
Interestingly, Binance CEO Changpeng Zhao (CZ) maintained that the exchange will continue to support BUSD for the foreseeable future even though there is a high tendency that users will migrate to other stablecoins over time.
There is no mincing word that Binance had experienced several moments of fear of doubt and uncertainty (FUD) and has been able to weather the storm. To this end, CZ reiterated that FUD is temporary.
