CZ issues response to SEC vs. Paxos lawsuit CZ issues response to SEC vs. Paxos lawsuit
CZ doubled down on his belief that BUSD should not be subject to US securities law and that that the exchange will continue to support BUSD.
2 min read
Updated: Aug. 1, 2023 at 12:05 pm UTC
Web Summit / CC BY 2.0 / Flickr. Remixed by CryptoSlate
Changpeng Zhao (CZ) confirmed the recent report that Paxos — a regulated blockchain infrastructure platform based in the US — has been directed to cease minting BUSD per instructions from the New York Department of Financial Services (NYDFS).
“Paxos will continue to service the product, and manage redemptions,” CZ said, adding that “Paxos also assured us the funds are #SAFU, and fully covered by reserves in their banks, with their reserves audited many times by various audit firms already.”
“I have no information about it, other than public news articles. The lawsuit is between the US SEC & Paxos,” CZ added.
CZ did however reiterate his longstanding point that he does not believe BUSD should be subject to securities law, due to what is known as the Howey Test criteria. According to the US Supreme Court, an item can be a security if it meets the following four criteria:
- An investment of money
- In a common enterprise
- With the expectation of profit
- To be derived from the efforts of others
“If BUSD is ruled as a security, it will have profound impacts on how the crypto industry will develop (or not develop) in the jurisdictions where it is ruled as such,” CZ said.
The response comes less than 24 hours after The Wall Street Journal initially reported that the NYDFS instructed Paxos Trust Co. — the issuer of stablecoin Binance USD (BUSD) — to halt any further creation of BUSD.
“Binance will continue to support BUSD for the foreseeable future. We do foresee users migrating to other stablecoins over time. And we will make product adjustments accordingly. eg, move away from using BUSD as the main pair for trading, etc.”
“Given regulatory uncertainty in certain markets, we will be reviewing other projects in those jurisdictions to ensure our users are insulated from any undue harm,” CZ added.
On Feb. 13, BUSD slipped to .9950 against its 1:1 peg of the US dollar in light of the Paxos news.
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Dorian Batycka
Dorian Batycka is a journalist interested in art and technology. He has previously contributed to CoinDesk, Decrypt, Artforum, Artnet News, the Art Newspaper, and many others. He can be found on Twitter and Instagram @temp_projects, where he often memes his way through current financial and art news, scandals, and events.
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BUSD is a stablecoin issued by Paxos in partnership with Binance..
Binance
Binance is a global cryptocurrency exchange that provides a platform for trading more than 100 cryptocurrencies.
Changpeng Zhao, popularly known as “CZ,” is a notable figure in the cryptocurrency world, primarily for founding and leading Binance, the world’s leading cryptocurrency exchange by trading volume.
