The U.S. Securities and Exchange Commission plans to sue Paxos for listing the Binance USD coin, alleging it is an unregistered security, according to the Wall Street Journal.
The SEC sent Paxos, a blockchain and trust company, a letter informing it of “a possible enforcement action,” the WSJ reported, citing anonymous sources. The suit is reportedly for "violating investor protection laws."
The move comes as U.S. regulators step up efforts to regulate cryptocurrency companies in the aftermath of exchange FTX’s well-publicized collapse. Another exchange, Kraken, recently settled with the SEC after being charged for its “staking-as-a-service program.”
Binance USD, or BUSD, is a stablecoin pegged to the dollar. Binance and Paxos launched it in 2019, according to the Wall Street Journal.
In a statement, Binance said it will continue to monitor the situation and that Paxos issues and owns BUSD.
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