New York-based crypto company Paxos was ordered by the New York Department of Financial Services to stop minting the Binance USD (BUSD) stablecoin over « several unresolved issues related to Paxos’ oversight of its relationship with Binance in regard to Paxos-issued BUSD ».

Nearly simultaneously, the SEC sent a Wells notice to Paxos, informing them of imminent enforcement action. According to the Wall Street Journal, the SEC told Paxos they intended to sue the company for violating investor protection laws, and that the SEC believed Binance USD was an unregistered security.

Paxos agreed to stop minting new BUSD tokens (but will continue to honor redemptions), and said in a statement that they would be ending their stablecoin-minting relationship with Binance. As for the SEC, Paxos has promised to « vigorously litigate if necessary », arguing that BUSD is not a security.