Paxos BUSD issuer to be sued by the SEC and stop parternship with Binance

The New York State Department of Financial Services has directed Paxos to cease the issuance of its Binance USD (BUSD) stablecoins.

The regulator has taken this action due to "unresolved issues" related to Paxos' relationship with Binance. BUSD is Binance's dollar-pegged stablecoin, which is used for trading cryptocurrencies such as Bitcoin and Ether.

Paxos' BUSD product, built on the Ethereum blockchain, is backed one-to-one by US Treasuries and Treasury Reverse Repurchase Agreements, with holdings of $16 billion as of January 31st.

The move is part of the regulatory effort to control the crypto industry. Paxos will cease the issuance of new BUSD tokens as directed by the New York Department of Financial Services, effective February 21st.

Binance CEO, Changpeng Zhao, has announced the termination of the relationship between Paxos and Binance via a Twitter statement. As a result of this development, the market cap of BUSD is expected to decline over time as users seek alternative stablecoins. Binance is likely to also explore potential replacements in order to continue serving its customer base.

The end of this partnership may have a significant impact on the crypto industry and it will be important to closely monitor the situation and any subsequent developments.