Paxos ordered to stop issuing stablecoin tokens by New York’s finance regulator

According to recent information from the New York Department of Financial Services (NYDFS), the company behind Binance’s Stablecoin has been told to halt issuing tokens by regulators.

stablecoin tokens by New York’s finance regulator

  • Justice Department looked into Binance after suspicions of money laundering
  • Paxos was accused by NYDFS of not issuing tokens in a secure manner.
  • Experts believe that the latest action signifies a setback for Binance.

Author: Nidhi Bhardwaj The stablecoin’s creator, Paxos, has been instructed by the New York Department of Financial Services to stop releasing the token as of February 21.According to a recent source, Paxos would continue to hold onto and redeem existing BUSD until at least February 2024.

What caused this choice?

The New York Department of Financial Services oversees Paxos Trust Company, which issued and redeemed the Binance USD.The NYDFS’s intervention coincides with a broader campaign by American regulators against cryptocurrencies and Binance. According to Reuters, Binance is under investigation by the Justice Department for possible money laundering and sanctions violations.As per the recent reports, SEC(Securities and Exchange Commission) has informed Paxos that it intends to sue the company, on the grounds of Binance USD being an unregistered security.An NYDFS spokesperson later told Reuters via email that Paxos violated its obligations for tailored, periodic risk assessments and due diligence checks on Binance and Binance USD customers needed to stop bad actors from using the platform.

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