The world’s largest crypto exchange has reportedly admitted that the New York Department of Financial Services has ordered Paxos to stop issuing the Binance USD (BUSD) stablecoin.

BUSD is the seventh-largest cryptocurrency, with a market cap of over $16 billion.

• The United States continues with its clampdown against several cryptocurrency participants. After Kraken fell victim to the SEC last week and had to halt its staking services, Paxos and Binance seem to be under the regulatory scope now.
• CryptoPotato cited a WSJ report informing that the SEC had issued a Wells notice to Paxos to warn of possible legal actions claiming that the company is selling unregistered securities when it issues BUSD.
• More recent coverage from the Wall Street Journal claimed that Binance admitted that the NYDFS had ordered Paxos Trust Co to seize issuing the stablecoin.

“Paxos has informed us that they have been directed to cease minting new BUSD by the New York State Department of Financial Services.” – reads a statement reportedly sent to Bloomberg.

• While both the WSJ and Bloomberg said Binance had provided the statement, the company’s CEO – Changpeng Zhao – had a somewhat different comment on Twitter.
• He referred to an old post stressing that people should be aware of the previous Fear, Uncertainty, and Doubt (FUD) created by some media outlets in the past, and they should ignore new such cases.

4 https://t.co/6f27u0mqp1

— CZ 🔶 Binance (@cz_binance) February 13, 2023

• It’s also important to note that BUSD is issued and custodied fully by Paxos, which was highlighted by CZ in a more recent update.
• He asserted that all funds are SAFU on both Binance and Paxos while also adding that the latter will continue to service the stablecoin, as well as manage redemptions.