Paxos has 30 days to respond to the SEC justifying why the agency should not sue the company. <\/span><\/li>\n<\/ul>\nThe sources further reveal that the SEC has sent Paxos a Wells Notice, a letter the regulator uses to notify companies of potential enforcement actions. The regulator claims that the Binance USD (BUSD) token is an unregistered security; therefore, Paxos violated investor protection laws by issuing the token.<\/span><\/p>\nAccording to a spokesperson for Binance, BUSD is one of the “most transparent” 1-to-1 backed stablecoins, and Paxos owns and issues the product. Binance has granted Paxos a license to use its brand with BUSD. The spokesperson also noted that the New York Department of Financial Services regulates the BUSD issuer, Paxos. <\/span><\/p>\nA Wells notice does not guarantee that the SEC will take any enforcement action. The decision to pursue enforcement litigation or a settlement lies with the five commissioners of the SEC, who must vote to authorize such action.<\/span><\/p>\nOn the other hand, Paxos has the option to respond in writing through a Wells submission. The response provides factual justifications for why the agency should not file any charges. Paxos has 30 days to respond to the SEC. <\/span><\/p>\nPaxo owns and has been issuing BUSD, a U.S. dollar-collateralized stablecoin, since September 2019 after a partnership with Binance. BUSD is the third-largest stablecoin and the 7th largest cryptocurrency in the world by market capitalization. <\/span><\/p>\nPaxos and the SEC have not responded to the issue at the time of publication.<\/span><\/p>\n