Paxos terminates cooperation with Binance USD due to investigation
2023.02.13 09:01
Paxos terminates cooperation with Binance USD due to investigation
By Kristina Sobol
Budrigannews.com – Due to the ongoing investigation by New York regulators, blockchain infrastructure platform Paxos Trust Company will stop issuing new Binance USD (BUSD) stablecoins.
The end of Paxos’ partnership with Binance for the branded BUSD stablecoin that is pegged to the US dollar was made public on February 13.
In accordance with instructions and in coordination with the New York Department of Financial Services (NYDFS), Paxos will cease minting new BUSD tokens on February 21.
Paxos emphasized that “at least February 2024,” all existing BUSD tokens will continue to be fully backed and redeemable through Paxos Trust Company. According to the company, customers will be able to convert their BUSD tokens into Pax Dollar (USDP), an additional stablecoin issued by Paxos:
“This action has no effect on our capacity to continue serving new or existing customers, our dedication to expanding our workforce, or the funding of our business goals.” Paxos remains committed to establishing itself as the global leader in the infrastructure for blockchain tokenization.
In reference to public transparency reports, Paxos also stated that Paxos Trust is a regulated institution supervised by the NYDFS and audited by a top-four accounting firm. To operate USDP and its gold-backed stablecoin Pax Gold (PAXG), the company will continue to maintain strong regulatory capital.
On Monday, Binance CEO Changpeng Zhao also reported on Twitter that Paxos informed the exchange that NYDFS had instructed them to cease new BUSD. The CEO emphasized that Paxos issues and manages the stablecoin, implying that Binance and regulators do not have a problem.
According to Zhao, “as a result, BUSD market cap will only decrease over time.”
At the time of writing, BUSD has a market capitalization of $16 billion, making it the seventh largest cryptocurrency in terms of market value. The token is trading at $0.998, down slightly from its $1 peg. This is not unusual for many other reserve-backed stablecoins, whose values frequently range from $0.9 to $1.2.
The announcement comes shortly after Paxos Trust was given an abrupt order on Feb. 13 by NYDFS to stop issuing BUSD. Previously, the Securities and Exchange Commission of the United States sent Paxos a notice claiming that BUSD is a security that has not been registered.
