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Pressure mounts on the crypto sector in the United States


The American financial policeman multiplies the investigations and sanctions. That on the company Paxos impacts the global giant Binance.

Actions follow words.

US financial regulators had warned that the FTX platform scandal would not be without consequences for the crypto sector.

After forcing trading platform Kraken to shut down one of its U.S. offerings and pay a $30 million penalty last week, the Securities and Exchange Commission (SEC) has opened an investigation into Paxos.

This company, regulated by the New York Department of Financial Services, is notably the issuer of a “stablecoin” called BUSD, used in the ecosystem of the global giant Binance and beyond.

Unlike a cryptocurrency whose -volatile-price varies according to supply and demand, a "stablecoin" is a cryptoasset whose objective is to maintain a stable value against a currency (or a basket of currencies), or an asset such as gold.

These cryptoassets are increasingly used by investors and savers, whether to protect themselves from the volatility of crypto markets or as means of settlement (cross-border transactions or within blockchain protocols).

With a capitalization of 16 billion dollars,

Issue of reservations

Paxos is in the sights of the SEC for having issued BUSD from 2019 without having registered it as a financial security ("security token"), which, according to it, violates investor protection.


Paxos is not capable of administering Binance's stablecoin in a safe and sound manner

," explained the New York Department of Financial Services.

Without providing further details for now, he added that the company had failed in its risk control and “due diligence” work obligations towards Binance.

With this investigation, Binance, the largest crypto-asset exchange platform in the world, therefore finds itself indirectly on the front line.


BUSD is a stablecoin fully owned and managed by Paxos (...) who have also ensured that the funds are safe, and fully backed by reserves in their banks

,” Binance recalled on Monday.

The question of reserves and the ability of stablecoins to maintain their parity with currencies has been at the heart of regulators' concerns, since the collapse in the spring of 2022 of another stablecoin, the TerraUSD, which was based on a completely different functioning.

According to Paxos, its BUSD stablecoin collateral reserves consist of cash and US treasury bills.

The announcement of the investigation triggered massive sales of BUSD on the market, logically dropping its parity with the dollar.

Paxos has reassured BUSD holders (there are around 6.2 million), who will be able to trade their tokens until February 2024. But this programmed death of BUSD will have short-term repercussions for traders and investors who use it , the time for them to convert them into other assets.

SEC Chairman Gary Gensler has been advocating for more stringent oversight of stablecoins for several years, which he referred to in 2021 as “

casino poker chips


But without a clear legal framework, the decision throws the crypto industry into limbo.


Given the current regulatory uncertainty in some markets, we will review further projects in these jurisdictions to ensure our users are protected from further undue harm,

” Binance said.

By forcing the company Kraken last week to close its staking offer in the United States (a service that allows a platform to remunerate users for the temporary immobilization of their cryptoassets), the SEC sent another strong signal. to all the major centralized players.

The only player listed on the stock market, the price of the giant Coinbase has also fallen by 20% since.

Source: lefigaro

All news articles on 2023-02-13

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