Binance says the NYDFS ordered Paxos to stop issuing more of its BUSD stablecoin, which has 6.2M holders; Paxos will continue redemptions and cut Binance ties

Firm will continue to manage redemptions of the product — New York regulators directed a crypto company to stop issuing …

Wall Street Journal 2023-02-13

Discussion

@cz_binance @cz_binance on x
#BUSD. A thread. 1/8 In summary, BUSD is issued and redeemed by Paxos. And funds are #SAFU!
@cz_binance @cz_binance on x
7/ Binance will continue to support BUSD for the foreseeable future. We do foresee users migrating to other stablecoins over time. And we will make product adjustments accordingly. eg, move away from using BUSD as the main pair for trading, etc.
@cz_binance @cz_binance on x
2/ We were informed by Paxos they have been directed to cease minting new BUSD by the New York Department of Financial Services (NYDFS). Paxos is regulated by NYDFS. BUSD is a stablecoin wholly owned and managed by Paxos.
@cz_binance @cz_binance on x
8/8 Given the ongoing regulatory uncertainty in certain markets, we will be reviewing other projects in those jurisdictions to ensure our users are insulated from any undue harm.
@cz_binance @cz_binance on x
6/ “IF” BUSD is ruled as a security by the courts, it will have profound impacts on how the crypto industry will develop (or not develop) in the jurisdictions where it is ruled as such.
@whale_alert @whale_alert on x
💵 💵 💵 💵 💵 💵 💵 💵 💵 💵 1,000,000,000 #USDT (1,000,556,075 USD) minted at Tether Treasury https://whale-alert.io/...
@gaborgurbacs Gabor Gurbacs on x
Stablecoin users seem to prefer Tether (USDT) as a flight to safety stablecoin trade. Volume is probably moving to Tether as Paxos stops issuing BUSD. https://twitter.com/...
@paxosglobal @paxosglobal on x
1/ This morning, Paxos announced it will halt minting new #BUSD tokens effective February 21. Read the full press release from Paxos here: https://paxos.com/...
@adamscochran Adam Cochran on x
The mistake of stablecoins was putting backing into treasuries as a business model which can make them securities. They either need to be loss leaders or fee bearing, and then you can *maybe* make a better argument in their favor.
@mdudas Mike Dudas on x
@tier10k Paxos was very explicit about this https://paxos.com/... https://twitter.com/...
@satoshiflipper Satoshi Flipper on x
.@GaryGensler needs to be removed from office and investigated for his role in the FTX fiasco. IMO all the recent SEC aggressive actions against the crypto industry are ways to distract the public from what this guy really did in cahoots with SBF. https://paxos.com/...
@tier10k @tier10k on x
Thought on BUSD not backed up by any professional qualification, think Elon rugged my long tweet access https://twitter.com/...
@adamscochran Adam Cochran on x
“Ready to explore other options” The one bank that partnered with them in the US has offboarded them... They don't really have other options... https://twitter.com/...
@0xfoobar @0xfoobar on x
users fleeing BUSD into DeFi bluechips such as BABYDOGE https://twitter.com/...
@binance @binance on x
Other people's relationship status: “taken” My relationship status: “token”
@mhonkasalo @mhonkasalo on x
All this talk about decentralized stablecoins, please see the trilemma by @RuneKek: 1) Actually stable stablecoin. 2) Non-RWA (no USD-like) collateral. 3) Possible to scale the supply. Choose 2 out of 3.
@silvermanjacob Jacob Silverman on x
BUSD sunsetting, wobbling on its peg. Meanwhile Tether's price spikes and Paolo sends $1b to Justin Sun. https://twitter.com/...
@fintechfrank Frank Chaparro on x
SEC is on an absolute warpath
@tree_of_alpha @tree_of_alpha on x
How on Earth does BUSD register as a security? Where is the expectation of profit? Are y'all buying BUSD because it's going to $2? Gary Gensler is on an unhinged, unchecked crusade against Crypto and will keep doing so as long as he is permitted to.
@ctolarsson CTO Larsson on x
Looks like a real issue then unfortunately. After 6 years of referring to the Howey test, SEC doesn't use it when it gives the wrong answer, or? Today is one of those days where I'm quite happy to be an engineer and not a lawyer. I have no clue folks. https://twitter.com/...
@austin_federa Austin Federa on x
WSJ coverage of Paxos/dfs/Binance has been top notch. Stablecoin market about to get quite a shakeup https://www.wsj.com/...
@dfauchier David Fauchier on x
Anyone have thoughts on whether this is a BUSD-specific issue, or whether all US-regulated stables are going to be considered securities by SEC? i.e. USDC USDP etc.
@criptopaul @criptopaul on x
So people swapped all their usdc on previous coinbase fud into busd then now busd into usdc again on actual paxos fud?
@dfauchier David Fauchier on x
https://www.prnewswire.com/... Effective February 21, Paxos will cease issuance of new BUSD BUSD will remain fully supported by Paxos and redeemable to onboarded customers through at least February 2024. No word on whether USDP affected, but presumably yes. Read-through to USDC o…
@paxosglobal @paxosglobal on x
END/ Paxos remains dedicated to the development of stablecoins, tokenization & #blockchain technology. We'll continue serving the world's most respected and established companies to create a more open financial system.
@paxosglobal @paxosglobal on x
3/ Paxos will continue to manage all outstanding BUSD reserves, ensuring all BUSD are always backed 1:1 with US dollar-denominated reserves held in bankruptcy remote accounts.
@clara_medalie Clara Medalie on x
The death of a stablecoin. While Paxos will honor all redemptions and BUSD-trading pairs are still active, without any new issuance the stablecoin effectively has no future. https://twitter.com/...
@paxosglobal @paxosglobal on x
2/ Existing BUSD tokens are fully-backed and redeemable through Paxos Trust Company through at least February 2024
@vegetacrypto1 @vegetacrypto1 on x
Looks like SEC missed the whole rally so non stop attacks now, Kraken, CB and BUSD now 😂😂
@cryptoworldjosh Josh on x
Well, #BUSD had a good run while it lasted. Looks like the #3 stablecoin will wind down over the next year. https://twitter.com/...
@kaikodata @kaikodata on x
#BUSD now trading at a discount to Tether on Binance. https://twitter.com/...
@du09btc @du09btc on x
Don't want to FUD, but maybe it's time to look for alternatives to #Binance ⚠ Looks like the SEC has a clear target in mind. This is not so much about #Paxos but the big elephant in the room. @PaxosGlobal would not leave $16 bil in #BUSD on the table unless it was serious. https:…
@ashcryptoreal @ashcryptoreal on x
Don't worry about the BUSD Fud BUSD not a scam token, it's backed by USD 1:1 Paxos not issuing any more BUSD will not effect the existing BUSD It's good to stay informed but don't make emotional moves.
@cz_binance @cz_binance on x
4 https://twitter.com/...
@cz_binance @cz_binance on x
3/ As a result, BUSD market cap will only decrease over time.
@stackersatoshi Satoshi Stacker on x
CZ 🧵 TL:DR: ✅NYDFS directs Paxos to halt BUSD minting leading to decrease in market cap ✅Funds are safe, backed by reserves, and audited. ✅SEC lawsuit labels BUSD as “unregistered security” ✅Binance supports BUSD but users may shift to other stablecoins. What you think?
@noelleinmadrid Noelle Acheson on x
A lot of the reactions I'm seeing to the SEC/Paxos news are along the lines of “but there's no expected profit, so no way are stablecoins a security!!”. Unfortunately, they could be (*does not mean they be!*). Here are a couple of arguments they might use: https://www.wsj.com/...
@jamyies James Crypto Guru on x
SEC destroys billions of dollars of marketcap “protecting us” https://twitter.com/...
@wublockchain Wu Blockchain on x
Paxos: BUSD will be redeemable to onboarded customers through at least February 2024. Customers will be able to redeem their funds in US dollars or convert their BUSD tokens to Pax Dollar (USDP). https://www.prnewswire.com/...
@chainlinkgod @chainlinkgod on x
Paxos forced to stop issuing $BUSD by NYDFS All eyes on $USDC now https://www.wsj.com/...
@shvandrew Andrey Shevchenko on x
Chokepoint in full swing it seems Lmao imagine Tether outlives USDC and Paxos https://twitter.com/...
@defiignas @defiignas on x
Binance BUSD<>USDC 1:1 conversion presents great arbitrage: 1. Deposit USDT 2. Swap to BUSD 3. Withdraw BUSD as USDC Swap USDC to USDT anywhere you get good rate Repeat for profit. https://twitter.com/...
@schuldensuehner Holger Zschaepitz on x
Binance coin BNB slumped >8% after New York Regulator ordered Paxos Trust to stop creating more of its #BUSD token. BUSD is a stablecoin backed by US Dollar, which was created in 2019 in partnership betw crypto platform Binance & blockchain comp Paxos. BNB is native Binance token…
@mdudas Mike Dudas on x
Ok, so it's clearly about Binance... “Paxos, the leading regulated blockchain and tokenization infrastructure platform, announced it will end its relationship with Binance for the branded stablecoin BUSD.” https://paxos.com/...
@wublockchain Wu Blockchain on x
The New York Department of Financial Services ordered Paxos Trust Co., which issues and lists Binance's dollar-pegged cryptocurrency, to stop creating more of its BUSD token. Paxos will continue to manage redemptions of the product. WSJ https://www.wsj.com/... https://twitter.com…
@chainlinkgod @chainlinkgod on x
Given that $BUSD can now only be redeemed, don't be surprised if you see the $BUSD peg on secondary markets trade at >$1 for periods of time, peg arbitrage can now only happen in one direction
@lawmaster Larry Cermak on x
@Tree_of_Alpha Don't think this would make it a security but there is 50-50 revenue split between Paxos and Binance. Rev share in general probably is enough for Garry to overstep his jurisdiction
@tier10k @tier10k on x
[DB] Paxos: Existing BUSD Remain Fully-Backed and Redeemable Through At Least Feb 2024
@tranjanofficial Ravi Ranjan Singh on x
RIP BUSD. With USDC next, I guess we go back to using USDT and DAI. https://www.wsj.com/...
@cz_binance @cz_binance on x
4/ Paxos will continue to service the product, and manage redemptions. Paxos also assured us the funds are #SAFU, and fully covered by reserves in their banks, with their reserves audited many times by various audit firms already.
@tree_of_alpha @tree_of_alpha on x
@cz_binance Sir Paxos being unable to mint more $BUSD sounds like more than a “4” moment, what is your strategy regarding in-house stablecoin going forward?
@coinmamba @coinmamba on x
RIP BUSD. With USDC next, I guess we go back to using USDT and DAI. https://www.wsj.com/...
@emilyjnicolle Emily Nicolle on x
Binance's BNB token has been sinking this morning as investors digest the news, down 5.4% https://twitter.com/...
@3pointo_cap Alfa on x
CZ exposed FTX fraud and now YS regulators want to put him out of business. https://twitter.com/...
@peckshieldalert @peckshieldalert on x
#PeckShieldAlert The latest transaction to mint $BUSD (~$209M) occurred on February 3rd, 2023. https://etherscan.io/... Subsequently, ~$123M worth of BUSD has been burned https://www.wsj.com/... https://twitter.com/...
@ashcryptoreal @ashcryptoreal on x
🚨 JUST IN 🚨 CRYPTO FIRM PAXOS TO STOP ISSUING NEW BUSD TOKENS. It's doesn't effect the existing supply of BUSD, it's pegged 1:1 USD
@nachotrades @nachotrades on x
News like this has a very powerful impact on markets, this month the SEC has gone after Coinbase, Kraken and now Paxos/BUSD. Not the best time to be trading altcoins tbh (apart from news trade scalps) https://twitter.com/...
@peckshieldalert @peckshieldalert on x
#PeckShieldAlert $BUSD at $0.9986 https://twitter.com/... https://twitter.com/...
@du09btc @du09btc on x
#BUSD is an unregistered security. SEC to sue #Paxos, issuer of BUSD. #Binance played smart to not issue it themselves. Is this how Circle and USDC decided to hit back at Binance? Meanwhile USDT market cap goes up. 🤣 https://twitter.com/...
@ninjascalp @ninjascalp on x
We were informed that we will no longer be able to mint BUSD out of the ass and pump markets FUNDS are SAFU, we already sold to the idiots at $24k keep building https://twitter.com/... https://twitter.com/...
@arturo_p_a Arturo Portilla on x
The NYDFS has reportedly ordered Paxos to fully stop issuing BUSD, which is kinda' odd considering the fact that the token was expressly approved by said regulator more than 3 years ago. https://www.wsj.com/...
@statelayer @statelayer on x
the mfs really took down BUSD at 3am EST
@jamyies James Crypto Guru on x
In the beginning, they called CZ a scammer, look at him now. Likewise, they called Vitalik a scammer look at him now. #Crypto is the future, and few understand this. HODL & BUIDL!
@loopifyyy @loopifyyy on x
The SEC trying to label BUSD as a security shows you all you need to know about them. This is yet again another blatant attack on Crypto. This isn't “protecting investors”.
@noelleinmadrid Noelle Acheson on x
meanwhile, there's some significant rotation out of BUSD and into USDT going on - seems like less so into USDC, but that's a less liquid pair https://twitter.com/...
@bitfinexed @bitfinexed on x
Stablecoins are going away. BUSD to suspend issuances. Not to worry, institutionalized investors will now start to send billions of dollars to Tether executives under criminal investigation for bank fraud. https://twitter.com/...
@fintechfrank Frank Chaparro on x
Paxos set to stop issuing BUSD after SEC threatens to sue. Binance reviewing other assets in US jurisdiction to de-list. I wouldn't be surprised if they are reviewing USDC, specifically.
@chadcaff @chadcaff on x
$BUSD starting to depeg? https://twitter.com/...
@emilyjnicolle Emily Nicolle on x
looking at all stablecoins on Binance, @KaikoData shows BUSD is about 35% of the exchange's total holdings, with Tether's USDT as the largest. Binance doesn't allow users to redeem BUSD for USDT at a 1:1 rate like it does for USDC, USDP and others https://twitter.com/...
@noelleinmadrid Noelle Acheson on x
The Howey test stipulates there needs to be an expectation of profit for an asset to be a security. That's an important leg, but not a deal-breaker. Courts have shown some leeway in the definition of “profit”, and SEC has suggested this is not a blocker. https://www.coindesk.com/…
@emilyjnicolle Emily Nicolle on x
Binance says Paxos, the issuer of its $16 billion branded stablecoin BUSD, has been told to stop minting by the New York Department of Financial Services https://www.bloomberg.com/...
@emilyjnicolle Emily Nicolle on x
BUSD is the world's third largest stablecoin at $16 billion in circulation, 90% of which is on Binance's platform per @nansen_ai https://twitter.com/...
@asvanevik Alex Svanevik on x
Paxos forced to stop issuing BUSD https://www.wsj.com/...
@tree_of_alpha @tree_of_alpha on x
This isn't a “get everything out” moment (yet), but this advice is now more important than ever. If you try to withdraw everything all at once when shit hits the fan, you WILL get blocked by your exchange's automatic risk control. https://twitter.com/...
@wsjmarkets @wsjmarkets on x
The SEC has told crypto firm Paxos Trust Company that it plans to sue the company for violating investor protection laws https://www.wsj.com/...
@milesdeutscher Miles Deutscher on x
The SEC has labelled BUSD as an “unregistered security”, and is suing its issuer, Paxos. But how on earth is a STABLECOIN considered a security, when it clearly doesn't meet the Howey Test criteria. No one has ever had “the expectation of profit” when buying $BUSD. https://twitte…
@ryansadams Ryan Sξan Adams on x
The SEC is making SEC compliance impossible for crypto projects. This is by design. And this is how an institution loses its legitimacy.
@cz_binance @cz_binance on x
5/ On the alleged SEC vs Paxos lawsuit, I have no information about it, other than public news articles. The lawsuit is between the US SEC & Paxos. I am not an expert on US laws. But personally, I agree with Mile's logic here (not that it means much): https://twitter.com/...
@thulynnn @thulynnn on x
1. stables standalone=! security, from legal pov, otherwise $ = security too; 2. my best guess: this related to bn earn products, aka where u deposit/stake & earn some APRs; or the binance chain busd. Those technically not related to pax but pax =easy target since us based https:…
@johnreedstark John Reed Stark on x
Newsflash: SEC issues Wells Notice to Paxos informing Paxos of possible enforcement action. In my 18 years at SEC enforcement division, I can't recall a time when I sent a Wells Notice and an enforcement action did not follow. SEC's crypto-sweep continues! https://www.wsj.com/...
@pt Parker on x
Guys, if it makes you feel better, people have been waiting in jail for decades for them to legalize pot and the drug war has been over a long time. Maybe see if you can get medical crypto through at the state level first? https://twitter.com/...
@jesse_hynes @jesse_hynes on x
For all the shit that the SEC gets, there really is not enough pressure on Congress for absolutely and unequivocally failing to establish regulations. I was screaming about this in 2019 and im still screaming about it today. Congress could easily end this charade
@twobitidiot Ryan Selkis on x
My new goal in life is to end @GaryGensler's political career and make him the reason Biden loses reelection. https://twitter.com/...
@ramahluwalia @ramahluwalia on x
1/ RE: Paxos & BUSD. The SEC issued a No Action Letter to Pocketful of Quarters - a crypto blockchain gaming token in 2019. There was no ‘expectation of profit’ - a prong of the Howey Test - since the token value was fixed (like a stablecoin). How can the SEC can treat a... https…
@lex_node @lex_node on x
don't hate me but custodial stablecoins are probably all securities I have said this consistently US securities laws are just insanely broad... https://archive.ph/nrgeU
@adamscochran Adam Cochran on x
1/5 This is what people don't realize. Howey test = precedent for investment contracts. “Securities” is a much broader category defined by the 1933 Securities Act. Honestly, if the SEC wants to, with how vague the act is, its fairly easy to put anything under it. https://twitter.…
@eleanorterrett Eleanor Terrett on x
Another step in the unilateral effort between the @SECGov, @NYDFS and @USOCC to blitz crypto. More Wells notices going out in the coming 2-3 weeks, I'm told. Keep an eye on @JunoFinanceHQ. https://www.wsj.com/...
@milesdeutscher Miles Deutscher on x
Yes, I'm aware that technically it doesn't need to pass the Howey Test to be considered a security. The SEC basically has free reign to define an investable asset as a security if it wishes to. But it undoubtably sets a scary precedent. https://twitter.com/...
@wublockchain Wu Blockchain on x
One point is that, combined with Kraken's staking product being fined by the SEC, Paxos's own stablecoin USDP is not within the notice, the SEC's crackdown on BUSD may be related to its deposit and interest-earning products. And Circle has a similar product, so that is risky too.
@smtuffy Sean Tuffy on x
The crypto gang forcing me to defend the SEC and Gensler is really getting exhausting.
@carnage4life Dare Obasanjo on x
Stablecoins were crypto's most useful and also its dumbest idea. Digital dollars backed by companies that could go bankrupt at anytime. It's practically regulatory malpractice for the SEC to watch people lose money in the crash then start enforcing now. https://www.wsj.com/...
@it_airmass @it_airmass on x
This is complete bullshit. A stable coin cannot be a security. One of the main tenets of the Howie test is “expectation of profit”. No one expects a stable coin to gain in value. If Paxos doesn't get this thrown out quickly, they are a bunch of pussies. https://www.wsj.com/...
@northrocklp Hal Press on x
This is unfortunate. Has quite broad and complex implications. Could get ugly and will take some time to sort through. Immediate question I am not sure of is does the enforcement stand while they go to court or not. https://www.wsj.com/...
@byzgeneral @byzgeneral on x
SEC sues Paxos over BUSD. The SEC is on a warpath. What a gross institution. Paxos is regulated by the NY state dep of financial services by the way. https://www.wsj.com/...
@adam3us @adam3us on x
ofc i expect paxos is being relatively prudent, not taking elevated term mismatch or high corp borrower default risks. (paxos manages BUSD underlying USD for binance). but like kraken they might nit-pick disclosures. who knows, we'll seen soon enough i guess
@illneil Neil Hartner on x
Justice for all the people who bought Paxos USD stablecoin with an expectation of profit but only broke even. https://twitter.com/...
@mdudas Mike Dudas on x
https://twitter.com/...
@adam3us @adam3us on x
speculative thought for gensler's latest. maybe at a stretch, SEC might argue 0% return on BUSD is a howey test pass for “expectation of return”. there is risk, maybe some term-mismatch ladders underneath, and there's a conflict where the operator profits from the risk.
@twobitidiot @twobitidiot on x
There's generally two types of “serious” people in crypto: 1) ok, playtime is over. what can we build that the government will let us. 2) ok here's what we built that works. playtime is over, fix the law. I'm in the fix the f*cking law. Now. camp.
@bambroughkevin Kevin Bambrough on x
Crypto stable coins represent a peg to a fiat currency while offering no interest income but all the risk of being a creditor to an unregulated firm run by sketchy people will go down in history as one of the absolutely stupidest assets anyone could ever purchase https://twitter.…
@cryptodefilord @cryptodefilord on x
Seems SEC is all out war this year. https://www.wsj.com/...
@starokg @starokg on x
Financial industry has big responsibilities to the society,regulation is definitely necessary. As a crypto company if we build it as a financial institution, can get some short term returns,but the risk and regulatory pressure always is there. Keep our technology gene is critical…
@safetyth1rd @safetyth1rd on x
The SEC doing coordinated hits on crypto like a 1920 mobster tell me how attacking a stablecoin protects investors you can't. because it doesn't.
@twobitidiot @twobitidiot on x
Hey @GaryGensler why don't we do a chat on crypto with a neutral moderator? You play dirty, but I'm not under your thumb so we can give the American investing public a fulsome debate on crypto instead of your shadow games. Time? Place?
@peckshieldalert @peckshieldalert on x
#PeckShieldAlert ~10M $USDP (Pax Dollar) have been burned from Paxos: Treasury https://etherscan.io/... https://twitter.com/...
@jebus911 @jebus911 on x
As someone who's been holding bUSD for years waiting for the pump, I'm glad the SEC is finally taking action

Chronicles

Binance says the NYDFS ordered Paxos to stop issuing more of its BUSD stablecoin, which has 6.2M holders; Paxos will continue redemptions and cut Binance ties

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