The United States Securities and Exchange Commission intends to drop its investigation into stablecoin issuer Paxos and not file an enforcement case.
According to a July 9 letter by Jorge Tenreiro, acting chief of the crypto assets and cyber unit, the SEC will not recommend an enforcement action against Paxos over the Binance USD (BUSD) token. In February 2023, Paxos received an SEC Wells notice claiming that BUSD was an unregistered security and that the platform violated federal securities laws.
“Paxos Trust Company has always maintained that its USD-backed stablecoins are not securities under federal securities laws and that the Wells Notice was unwarranted and unjustified,” said Paxos in a July 11 statement. “We are proud of our relentless advocacy for stable-value digital assets and that the SEC staff determined it will not bring enforcement action against Paxos in connection with BUSD.”
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The SEC dropping its investigation followed several court rulings against the regulator, including over its pursuit of certain tokens as securities. In July 2023, a federal judge ruled in SEC v. Ripple that the XRP (XRP) token was not a security in regard to programmatic sales on digital asset exchanges. In June 2024, the judge overseeing the SEC’s case against Binance cited the Ripple ruling in dismissing a claim related to BUSD.
At the time of publication, the SEC has ongoing enforcement actions filed against crypto firms, including Ripple, Binance, Kraken and Coinbase. However, officials may be forced to reevaluate lawsuits after a Supreme Court ruling no longer requires courts to defer to federal agencies in interpreting policies.
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