The Securities and Exchange Commission has told crypto firm Paxos Trust Co. that it plans to sue the company for violating investor protection laws, according to people familiar with the matter, the latest move in the agency’s escalating campaign in crypto enforcement.
The SEC’s enforcement staff issued a letter to Paxos known as a Wells notice, which the agency uses to inform companies and individuals of a possible enforcement action, according to the people.
The notice alleges that Binance USD, a digital asset that Paxos issues and lists, is an unregistered security, according to the people.
BUSD is a Binance-branded stablecoin pegged to the dollar on a one-to-one ratio. Binance and Paxos announced the partnership to launch it in 2019. The Paxos-run digital asset exchange, itBit, also lists BUSD. Many other exchanges also list BUSD.
It couldn’t be determined if the SEC notice is specifically related to Paxos’ issuing of the coin, the listing of the coin or both.
An expanded version of this report appears on WSJ.com.
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