Various altcoins have faced a series of restrictive decisions from US regulators in recent weeks. Paxos, the company authorized to issue Binance-branded stablecoin BUSD, was at the center of the event:
- On February 3, Paxos received a Wells Notice from the SEC stating they were under investigation.
- On February 21, Paxos stopped printing new BUSD after the Wells Notice, a document the SEC provides to entities under investigation.
What is the SEC Wells statement?
In 1972, SEC Chairman William J. Casey formed a committee (led by John Wells, commonly known as the “Wells Committee”) to review and evaluate the Commission’s enforcement policies and practices.
The Wells Statement was created as a result of the committee’s recommendations. Although there is no rule or regulation mandating that a defendant be allowed to address the decision maker before filing a lawsuit, the Wells Notice does provide the defendant a chance to do so.
Paxos Wells statement
In February, Paxos announced that the SEC had issued a Wells Notice earlier in the month. The notice alleged that Paxos’ stablecoin, BUSD, is an unregistered security. This Wells Statement was an important development. It showed that the SEC has started or completed an investigation into BUSD and the next action could be sanctions. Opposing the decision, PAXOS wrote:
Paxos categorically disagrees with SEC staff because BUSD is not a security under federal securities laws. This SEC Wells Statement concerns BUSD only. To be clear, there are absolutely no other claims against Paxos.
Paxos announced in its statement that the Wells Statement has no impact on the Pax Dollar (USDP-USD). It is noteworthy, however, that USDP and BUSD are basically the same: Both are dollar-backed stablecoins managed and minted by Paxos. The only significant difference between them is that most of the usage of BUSD is based on Binance Smart Chain (BSC), while USDP is not associated with any private Blockchain.
SEC’s main target could be Binance lawsuit stretching back to 2018
It is possible that the SEC has issued multiple Wells Notices specifically because they have identified an issue with Binance or because they need to be more consistent in their actions, as Grayscale claims. However, given that BUSD is primarily used on Binance Smart Chain, the SEC can also be expected to have a particular issue with Binance. cryptocoin.com As we reported, Binance also came to the fore late last year with a case related to a money laundering investigation that started in 2018.
Which altcoins are in danger?
As stablecoins become more and more commonplace in the cryptocurrency world, the latest Wells Notice sent by the SEC to Paxos is causing concerns. It is not yet clear whether this action relates to stablecoins in general or just Binance, which uses BUSD heavily. But it raises the question of whether other fiat-backed stablecoins can be considered unregistered securities, clarifying their potential to receive Wells Science.
In such a case, the main altcoins that may have to stop their activities or have difficulty keeping their price stable are as follows:
- Tether (USDT)
- USD Coin (USDC)
- Dai (DAI)
- TrueUSD (TUSD)
- Pax Dollar (USDP)
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