SEC “withdraws” from Paxos investigation - BUSD escapes securities charges

Today's decision by the SEC means BUSD has escaped the "label" of a security, bringing another victory to the crypto sector.

On the evening of July 11, the US Securities Commission (SEC) suddenly "revoked" the investigation of Paxos, the issuer of BUSD - the stablecoin once associated with the Binance brand.


“Paxos prevails in SEC investigation of BUSD stablecoin” 👏

On Tuesday, we received a formal termination notice from the SEC stating that it will not recommend enforcement action against Paxos Trust Company in the investigation of Binance USD (BUSD).

View the letter and our… pic.twitter.com/8kjysfsPg3— Paxos (@Paxos) July 11, 2024
Accordingly, US officials accepted to close the charges placed on Paxos from February 2023, and also did not recommend any enforcement action. This information was confirmed by Jorge Tenreiro, Deputy Director of the SEC's Network and Cryptoassets Unit.

Today's move is an important victory for the crypto industry, in the context of stablecoins still being ambiguous as to whether they are securities or not.

The SEC's "withdrawal" is also said to be influenced by a recent court ruling in favor of Binance, which held that BNB sales on the secondary market were not considered securities, similar to the ruling in mid-2023 regarding a lawsuit between the SEC and Ripple.
Walter Hessert, representative of Paxos, shared:

"The announcement of the end of the investigation is a relief to us. This ruling could break down barriers, motivating large enterprises to explore the stablecoin sector.”
The legal controversy has lasted for the past year and a half, sparked by the New York government on February 10, 2023. Two days later, Paxos officially received a Wells Notice from the SEC, denouncing BUSD as a disguised security.

Paxos was also forced by authorities to stop issuing BUSD, leading to the decision to cut ties with Binance - because BUSD at that time was associated with the name of the world's largest cryptocurrency exchange.

As a result, Paxos had to burn 700 million BUSD, sequentially from Binance, CEO Changpeng Zhao to the crypto community gradually separating themselves and "killing" this stablecoin. Binance in particular has removed BUSD trading pairs since the end of last year and "promoted" the new star FDUSD.

However, the US Securities Commission still has lawsuits targeting Coinbase, Binance, blockchain infrastructure developer Consensys, warning DEX Uniswap, as well as imposing a $4.47 billion fine on Do Kwon and Terraform Labs.