According to the Wall Street Journal, the United States SEC may file a lawsuit against the Paxos Trust Company. As per the alleged accusation, Pasos reportedly breached investor protection rules in its release of the stablecoin known as Binance USD. According to the WSJ, which cited anonymous sources familiar with the case, the SEC warned Paxos of potential enforcement action by claiming that the BUSD, which is tethered to the U.S. dollar, is unregistered security.

SEC’s Wells Notification to BUSD Stablecoin Issuer Paxos: Possible Lawsuit or Explanation Opportunity

The WSJ pointed out that the SEC’s Wells notification is not a conclusive indicator. It would move through with legal action since those who receive it can provide reasons why the SEC shouldn’t continue with litigation.

CoinMarketCap data shows that BUSD, issued and listed by Paxos, is the third biggest stablecoin throughout the world. Its market worth of it is nearly US$16 billion. Located in New York City Once Paxos received certification from the New State Department of Financial Services, it partnered with Binance to introduce the USD-backed BUSD stablecoins in 2019. Binance has admitted that the stablecoin has been under-collateralized on many occasions due to bugs in the system.

SEC’s Investigation of BUSD Stablecoin: Impact on Crypto Industry & Global Community

According to an official statement from a Binance representative sent to Forkast, BUSD is 100% managed by Paxos. It is also controlled by the New York Department of Finance. Restricting access to stablecoins would have a devastating effect on millions of individuals all over the world who are looking for a haven from the wildly fluctuating prices of cryptocurrencies. As the communication stated, we will keep an eye on developments. According to Bloomberg, the New York State’s Financial Department Services is also investigating Paxos. However, the nature of their inquiry was not specified.

Trending Now: Kraken Comes Under the Radar of SEC for Potential Securities Violations

This SEC action appears to be a component of a larger investigation against the crypto industry as a whole. U.S.-based Kraken was fined $30m by the SEC for not having registered the selling of their cryptocurrency staking programs. As a result, Kraken said on Thursday that it will stop offering on-chain staking services to customers in the US.