A week ago, Paxos said it received a Wells Notice from the regulator.
The U.S. Securities and Exchange Commission (SEC) and stablecoin issuer Paxos are having a “constructive discussion,” Chief Executive Officer Charles Cascarilla said.
Earlier this week, Paxos acknowledged receiving a Wells Notice from the SEC. A Wells Notice is a tool used by the SEC to allege certain activity may violate federal securities laws, which may indicate an intention to sue.
Binance USD (BUSD) was the company’s branded stablecoin product that prompted Paxos to issue its notice. The Pax dollar (USDP), the company’s own stablecoin product, was not included. Paxos has already announced it will stop issuing BUSD after receiving a notice from the New York Department of Financial Services, the state regulator overseeing it.
“The market has evolved and the Binance relationship no longer aligns with our current strategic priorities,” Cascarilla said in the note.
Paxos has facilitated more than $2.8 billion in BUSD redemptions since halting issuance, with no significant market disruptions.
It has been accelerating its crackdown on crypto companies that violate federal law, according to the SEC. It settled charges that Kraken’s staking service product was an unregistered securities offering in the last few weeks; it settled allegations that Paul Pierce failed to disclose being paid to promote a token; and it sued Gemini, Genesis, and Terraform Labs (Genesis and CoinDesk share the same parent company, Digital Currency Group).
In the meantime, Paxos is working with regulators to improve its standing.
“We are working with the SEC towards the publication of our Clearing Agency application,” Cascarilla said. “We are working with the OCC to implement our conditional approval into an operationalized and launched National Trust,” he added. Following last year’s approval as a Payment Service Provider, we are working to expand our Singapore products in consultation with the MAS. Each of these opportunities and any others for productive collaboration with regulators are pursued by us.”