Pomerantz has launched an investigation into Paxos on behalf of customers to unravel any wrongdoing by the Binance USD (BUSD) stablecoin issuer in the wake of the former’s battle with the Securities and Exchange Commission (SEC).
Pomerantz investigating Paxos
Pomerantz, a corporate securities and antitrust law firm with offices across the US and in Paris, has announced that it has commenced an investigation into Paxos Trust Co., the issuers of the Binance USD (BUSD) stablecoin on behalf of customers.
The SEC issued a Wells notice to Paxos on Feb. 13, mandating the firm to stop minting new BUSD tokens with immediate effect, as the asset is an unregistered security that must come under its purview.
Against that backdrop, Pomerantz, which claims to have helped countless securities fraud victims recover their funds in the past, is investigating possible “unlawful business practices” by Paxos execs.
Paxos challenges the SEC
Importantly, unlike Jesse Powell’s Kraken, which promptly reached a $30 million settlement with an SEC after the regulator recently ordered the shutting down of its crypto staking product, Paxos has disagreed with the agency’s classification of BUSD as security.
The ongoing Paxos-SEC battle has triggered massive inflows of the BUSD stablecoin into centralized exchanges, with Binance’s bitcoin (BTC) reserves plunging significantly due to the FUD created.
The matter has also triggered a serious debate on crypto Twitter about what constitutes a security under US laws.
Despite being criticized for its heavy-handed approach toward crypto regulation, the SEC remains unfazed, and it won’t be a surprise to see more enforcement actions against other U.S. crypto firms soon.