Circle USDC Filed A Regulatory Complaint Alleging Binance Mismanaged Reserves In 2022

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Circle USDC filed a regulatory complaint alleging Binance mismanaged reserves in 2022, Bloomberg reports.

What: Circle filed a regulatory complaint against Binance last year
Why: It claimed that Binance mismanaged token reserves when it did not store enough crypto in reserve to support tokens it had issued.
What next: The case will get its bearing from the current debacle between Paxos, BUSD, and the SEC

Stablecoin issuer Circle filed a regulatory accusation against Binance in 2022, alleging that the crypto exchange mismanaged token reserves before the case filed last week against the BUSD issuer Paxos, according to a Bloomberg report. Other than sharing a regulator with Paxos, Circle operates the USD stablecoin as well.

JUST IN: Circle $USDC filed regulatory complaint alleging #Binance mismanaged reserves in 2022, Bloomberg reports.

— Watcher.Guru (@WatcherGuru) February 13, 2023

The complaint is linked to last week’s filing, where Paxos was said to be under investigation by the Securities and Exchange Commission (SEC) about the BUSD stablecoin. The situation has quickly culminated to involve the largest crypto exchange platform by trading volume as the issuer of the Binance stablecoin. From the report, the New York State Department of Financial Services received a complaint from Circle Internet Financial last year against Binance concerning an identified mismanagement of token reserves. Notably, Circle filed the complaint several months before the regulatory agencies intervened. A paragraph in the report reads:

Circle alerted the watchdog last autumn to issues its team had surfaced in blockchain data that showed Binance did not store enough crypto in reserve to support tokens it had issued.

The New York Regulator ordered Paxos to terminate its partnership with Binance and cease minting BUSD stablecoin on Monday, citing “Several unresolved issues related to Paxos’ oversight of its relationship” concerning the BUSD stablecoin, as reported earlier. Moreover, the regulator highlighted that it did not “oversee a token issued by Binance that is meant to serve as a proxy of BUSD, nor is Paxos approved to issue it.” In a statement, Paxos said that the crypto firm would stop issuing new BUSD tokens starting February 21 following the official order.

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