NYDFS Orders Paxos To Stop Issuing Binance USD Stablecoin
- Paxos will continue to manage redemptions and services related to the stablecoin.
- Binance’s BNB token tanked more than 7% following the NYDFS’s order.
The New York Department of Financial Services (NYDFS) has reportedly ordered Paxos to stop mining new Binance USD (BUSD) stablecoins. The order to stop issuing BUSD comes just hours after Paxos was served a Wells notice by the Securities and Exchange Commission (SEC) for allegedly violating investor protection laws.
According to a recent report, the New York regulator ordered Paxos to stop issuing the world’s third-largest stablecoin amid a renewed regulatory crackdown against crypto firms. As per a statement from Binance, “Paxos will continue to service the product, manage redemptions, and will follow up with additional information as required. Paxos also assured the funds are safe, and fully covered by reserves in their banks.”
The order from the NYDFS caused Binance’s BNB token to tank by nearly 8% as investors scrambled to secure their funds. The token went from $314 to $290 within hours of the news. Meanwhile, BUSD’s chart also showed signs of distress. On-chain data published by 0xScope revealed that BUSD’s last mint occurred earlier this month on February 3. The mint added $209 million worth of the stablecoin in circulation.
Binance founder and CEO Changpeng Zhao took to Twitter to address the recent developments surrounding BUSD and Paxos. Zhao initially labeled the whole affair as “FUD”. This was followed by a lengthy thread where he indicated that Binance may move away from BUSD as the main pair for trading. Paxos reportedly assured Binance that all the funds associated with BUSD were safe and fully covered by audited reserves in the bank.