Infrastructure company and stablecoin issuer Paxos failed to secure BUSD, which could lead to misconduct. About it Reuters reported by the New York State Department of Financial Services (NYDFS).
«[Paxos] violated its obligation to conduct individual periodic risk assessments and updates due diligence of Binance clients and issued Paxos BUSD to prevent attackers from using the platform,” the NYDFS explained.
On February 10, it became known that the regulator initiated an investigation against the company.
The NYDFS later ordered Paxos to stop issuing BUSD. Its representatives confirmed that they are breaking off cooperation with Binance regarding the stablecoin, and from February 21 they will stop issuing new coins. At the same time, the firm will continue to support buyback and conversion operations until at least February 2024.
1/ This morning, Paxos announced it will halt minting new #BUSD tokens effective February 21. Read the full press release from Paxos here: https://t.co/jXZY1ak8DR
— Paxos (@PaxosGlobal) February 13, 2023
Earlier, The Wall Street Journal reported on the intention of the US Securities and Exchange Commission to sue Paxos for participating in the issue of BUSD.
Against this background, the price of the BNB token on the Binance exchange fell. At the time of writing, the asset is trading above $280, having lost 11.3% over the past day (CoinGecko). The head of the platform, Changpeng Zhao, noted that Paxos independently operates a stablecoin.
Paxos is an issuer of BUSD and USDP, as well as costs behind the Pax Gold token with a total market value of $488.7 million. The asset is backed by physical gold.
Recall that the payment giant PayPal has paused work on its own stablecoin due to news about the investigation against Paxos.
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