{"id":298251,"date":"2023-02-13T12:40:12","date_gmt":"2023-02-13T12:40:12","guid":{"rendered":"https:\/\/cryptoslate.com\/?p=298251"},"modified":"2023-08-01T12:05:52","modified_gmt":"2023-08-01T11:05:52","slug":"cz-issues-response-to-sec-vs-paxos-lawsuit","status":"publish","type":"post","link":"https:\/\/cryptoslate.com\/cz-issues-response-to-sec-vs-paxos-lawsuit\/","title":{"rendered":"CZ issues response to SEC vs. Paxos lawsuit"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Changpeng Zhao (CZ) confirmed the recent <\/span><a href=\"https:\/\/cryptoslate.com\/the-sec-may-potentially-sue-paxos-over-binanceusd-wsj\/\"><span style=\"font-weight: 400;\"><strong>report<\/strong><\/span><\/a><span style=\"font-weight: 400;\"> that Paxos \u2014 a regulated blockchain infrastructure platform based in the US \u2014 has been directed to cease minting BUSD per instructions from the New York Department of Financial Services (NYDFS).\u00a0<\/span><\/p>\n<blockquote><p><strong>\u201cPaxos will continue to service the product, and manage redemptions,\u201d CZ said, adding that \u201cPaxos also assured us the funds are #SAFU, and fully covered by reserves in their banks, with their reserves audited many times by various audit firms already.\u201d<\/strong><\/p><\/blockquote>\n<p><span style=\"font-weight: 400;\">\u201cI have no information about it, other than public news articles. The lawsuit is between the US SEC & Paxos,&#8221; CZ <a href=\"https:\/\/twitter.com\/cz_binance\/status\/1625067486172397571?s=20&t=aIE_qAId-hO1jaqOG5H07Q\">added<\/a>.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">CZ did however reiterate his longstanding point that he does not believe BUSD should be subject to securities law, due to what is known as the Howey Test criteria. According to the US Supreme Court, an item can be a security if it meets the following four criteria:<\/span><\/p>\n<ol>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">An investment of money<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">In a common enterprise<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">With the expectation of profit<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">To be derived from the efforts of others<\/span><\/li>\n<\/ol>\n<p><span style=\"font-weight: 400;\">\u201cIf BUSD is ruled as a security, it will have profound impacts on how the crypto industry will develop (or not develop) in the jurisdictions where it is ruled as such,&#8221; CZ said.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The response comes less than 24 hours after The Wall Street Journal initially <\/span><strong><a href=\"https:\/\/www.wsj.com\/articles\/crypto-firm-paxos-to-stop-issuing-dollar-pegged-binance-token-94f65e52?mod=markets_minor_pos10\">reported<\/a><\/strong><span style=\"font-weight: 400;\"> that the NYDFS instructed Paxos Trust Co. \u2014 the issuer of stablecoin Binance USD (BUSD) \u2014 to halt any further creation of BUSD.\u00a0<\/span><\/p>\n<blockquote><p><strong>\u201cBinance will continue to support BUSD for the foreseeable future. We do foresee users migrating to other stablecoins over time. And we will make product adjustments accordingly. eg, move away from using BUSD as the main pair for trading, etc.\u201d<\/strong><\/p><\/blockquote>\n<p><span style=\"font-weight: 400;\">\u201cGiven regulatory uncertainty in certain markets, we will be reviewing other projects in those jurisdictions to ensure our users are insulated from any undue harm,&#8221; CZ added.<\/span><\/p>\n<p>On Feb. 13, BUSD slipped to .9950 against its 1:1 peg of the US dollar in light of the Paxos news.<\/p>\n<figure id=\"attachment_298268\" aria-describedby=\"caption-attachment-298268\" style=\"width: 1055px\" class=\"wp-caption alignnone\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-298268 size-full\" src=\"https:\/\/cryptoslate.com\/wp-content\/uploads\/2023\/02\/Screenshot-2023-02-13-at-1.22.02-PM.png\" alt=\"BUSD - USDT Price on Binance (Source: Kaiko)\" width=\"1055\" height=\"584\" srcset=\"https:\/\/cryptoslate.com\/wp-content\/uploads\/2023\/02\/Screenshot-2023-02-13-at-1.22.02-PM.png 1055w, https:\/\/cryptoslate.com\/wp-content\/uploads\/2023\/02\/Screenshot-2023-02-13-at-1.22.02-PM-300x166.png 300w, https:\/\/cryptoslate.com\/wp-content\/uploads\/2023\/02\/Screenshot-2023-02-13-at-1.22.02-PM-1024x567.png 1024w, https:\/\/cryptoslate.com\/wp-content\/uploads\/2023\/02\/Screenshot-2023-02-13-at-1.22.02-PM-768x425.png 768w\" sizes=\"(max-width: 1055px) 100vw, 1055px\" \/><figcaption id=\"caption-attachment-298268\" class=\"wp-caption-text\">BUSD &#8211; USDT Price on Binance (Source: Kaiko)<\/figcaption><\/figure>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Changpeng Zhao (CZ) confirmed the recent report that Paxos \u2014 a regulated blockchain infrastructure platform based in the US \u2014 has been directed to cease minting BUSD per instructions from the New York Department of Financial Services (NYDFS).\u00a0 \u201cPaxos will continue to service the product, and manage redemptions,\u201d CZ said, adding that \u201cPaxos also assured [&hellip;]<\/p>\n","protected":false},"author":1406,"featured_media":346180,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[120,77968,32631],"tags":[],"post_folder":[],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v21.9 (Yoast SEO v21.9.1) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>CZ issues response to SEC vs. Paxos lawsuit<\/title>\n<meta name=\"description\" content=\"CZ doubled down on his belief that BUSD should not be subject to US securities law and that that the exchange will continue to support BUSD.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/cryptoslate.com\/cz-issues-response-to-sec-vs-paxos-lawsuit\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"CZ issues response to SEC vs. Paxos lawsuit\" \/>\n<meta property=\"og:description\" content=\"CZ doubled down on his belief that BUSD should not be subject to US securities law and that that the exchange will continue to support BUSD.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/cryptoslate.com\/cz-issues-response-to-sec-vs-paxos-lawsuit\/\" \/>\n<meta property=\"og:site_name\" content=\"CryptoSlate\" \/>\n<meta property=\"article:published_time\" content=\"2023-02-13T12:40:12+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-08-01T11:05:52+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/cryptoslate.com\/wp-content\/uploads\/2023\/07\/changpeng-zhao-cz-1.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"630\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Dorian Batycka\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cryptoslate\" \/>\n<meta name=\"twitter:site\" content=\"@cryptoslate\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Dorian Batycka\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"NewsArticle\",\"@id\":\"https:\/\/cryptoslate.com\/cz-issues-response-to-sec-vs-paxos-lawsuit\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/cryptoslate.com\/cz-issues-response-to-sec-vs-paxos-lawsuit\/\"},\"author\":{\"@type\":\"Person\",\"@id\":\"https:\/\/cryptoslate.com\/author\/dorian-batycka\/#person\",\"name\":\"Dorian Batycka\",\"url\":\"https:\/\/cryptoslate.com\/author\/dorian-batycka\/\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/cryptoslate.com\/author\/dorian-batycka\/\"},\"image\":{\"@type\":\"ImageObject\",\"@id\":\"https:\/\/cryptoslate.com\/author\/dorian-batycka\/#authorimage\",\"url\":\"https:\/\/cryptoslate.com\/wp-content\/uploads\/2023\/01\/dorian-author-300x300.jpg\",\"contentUrl\":\"https:\/\/cryptoslate.com\/wp-content\/uploads\/2023\/01\/dorian-author-300x300.jpg\",\"caption\":\"Dorian Batycka\"},\"jobTitle\":\"Contributor\",\"description\":\"Dorian Batycka is a journalist interested in art and technology. 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