The United States Securities and Exchange Commission (SEC) plans to end its investigation into stablecoin issuer Paxos without filing an enforcement case.
No Enforcement Action Against Paxos
In a letter dated July 9, Jorge Tenreiro, acting chief of the SEC’s crypto assets and cyber unit, stated that the SEC will not recommend enforcement action against Paxos over its Binance USD (BUSD) token. Earlier in February 2023, Paxos had received a Wells notice from the SEC, accusing it of issuing an unregistered security and violating federal securities laws.
Paxos Responds
Paxos responded to the news on July 11, saying, “Paxos Trust Company has always maintained that its USD-backed stablecoins are not securities under federal securities laws and that the Wells notice was unwarranted and unjustified. We are proud of our relentless advocacy for stable-value digital assets and that the SEC staff determined it will not bring enforcement action against Paxos in connection with BUSD.”
Impact of Court Rulings
The decision to drop the investigation against Paxos came after several court rulings against the SEC. In July 2023, a federal judge ruled in SEC v. Ripple that the XRP token was not a security in relation to sales on digital asset exchanges. Similarly, in June 2024, the judge in the SEC’s case against Binance dismissed a claim related to BUSD, citing the Ripple ruling.
Ongoing SEC Actions
Despite this development, the SEC still has ongoing enforcement actions against other crypto firms, including Ripple, Binance, Kraken, and Coinbase. However, recent changes in the legal landscape, such as a Supreme Court ruling that no longer requires courts to defer to federal agencies in interpreting policies, may force the SEC to reconsider some of its lawsuits.
