- Paxos received a wells notice from the SEC regarding the issuance and use of Binance USD stablecoin (BUSD).
- Soon after, Paxos was ordered by the NYDFS to cease issuing USD.
- Paxos manages BUSD redemptions, despite the fact that BUSD issuance has ceased
As investors respond to the US SEC’s claim that Binance USD is a security, Binance crypto exchange has seen increased withdrawals in the past 24 hours. Data Nansen, a blockchain intelligence platform, has revealed that net outflows from this exchange reached $788 Million in the past 24hrs.
This is the largest net outflow from Binance since December 17 when the exchange’s proof of reserves audit was pulled down from the website of Mazars auditor.
Binance however has reacted to the fears by claiming that its funds are safe and can handle all withdrawals. According to the exchange,
“We run a very simple business model — hold assets in custody and generate revenue from transaction fees.”
The US SEC sent a wells note to Paxos Trust Company, stating that the company was violating investor protection laws and issuing unregistered securities such as the BUSD. Following the SEC’s action, the New York Department of Financial Services (NYDFS) ordered Paxos to halt the issuance of BUSD and Paxos immediately obeyed the orders.
Inflation in BUSD Redeemables
BUSD token redemptions have increased as investors rush to withdraw funds from Binance. Peckshield data has shown that 342 million of these BUSD tokens were consumed in the last 24 hours.
Investors seem to be cashing out of the BUSD stablecoin as fears of the SEC escalating the issue and filing a lawsuit as is the case with Ripple’s XRP token gain traction.