The CEO of Binance took to Twitter to provide clarity on the situation after Paxos, which regulates the New York Department of Financial Services, announced it had been ordered to “terminate its relationship with Binance” for the BUSD-branded stablecoin.

CZ on Alleged SEC Action Against Paxos and BUSD

Following news of the SEC plans to oppose Paxos Trust Company over BUSD, Binance CEO Changpeng Zhao (CZ) took to Twitter on Monday to clarify the situation. Paxos announced it would “stop issuing new BUSD tokens” on February 21, as it was ordered to do so by the New York Department of Financial Services.

CZ noted that BUSD is a stablecoin that is entirely owned and managed by Paxos, and that Binance would be discontinuing its use for buying and selling in accordance with the situation. He also commented on the SEC’s alleged lawsuit, stating that he was in agreement with cryptanalyst Miles Deutscher’s evaluation.

Deutscher tweeted his opinion Monday morning on the SEC’s motion against Paxos. He wrote: “The SEC has designated BUSD as an ‘unsafe currency’ ‘unregistered security’ and is suing its issuer. But how is it safe to think about a stablecoin when it doesn’t meet the standards? Howey have a look at these? No one has ever had ‘the expectation of profit’ when buying BUSD.”

In a follow-up tweet, Deutscher acknowledged that the SEC is “basically free to define an investable asset as a security if it chooses,” but added that it sets a “terrifying precedent.” CZ echoed this and warned of “profound impacts” if BUSD is declared a security.

The Binance CEO also assured users that all funds are secure and “fully covered by reserves at their banks.” He also promised Binance would be there to support BUSD “for the foreseeable future,” noting that customers would be encouraged to move to other stablecoins as they become available.

Last week, the SEC voted against Kraken over the crypto exchange’s stake program. Kraken agreed to pay out $30 million in compensation, pre-judgment interest and civil penalties for the closure of the service to US customers. CEO Jesse Powell called on Congress to pass laws to protect the US crypto market and American customers “who will now go overseas for services that are not available in the US.”

What are your thoughts on the SEC’s claim that the BUSD stablecoin was an unregistered security? Let us know in the comments section below.

kevin helms

Kevin is an Austrian economics scholar who discovered Bitcoin and became an evangelist in 2011. His interests lie in Bitcoin security, open source systems, and network effects.