SEC Lawsuit Against Paxos Over BUSD - Coin Amazon

SEC Lawsuit Against Paxos Over BUSD - Coin Amazon

written by John Murphy | February 13, 2023

February 13th has left the crypto community confused after the United States Securities and Exchange Commission (SEC) issued notice to BUSD’s issuer Paxos. The verdict further declares BUSD as an unregistered security. Moreover, the New York Department of Financial Services (NYDFS) has asked Paxos to stop the issuance of BUSD.

The news has drawn mixed reactions from around the world, as investors cannot believe that such a stable coin was declared unregistered. Many traders took to social media to express their views, most of which were in disbelief.

Reactions to the Lawsuit

Many experts and analysts rushed to social media to share their opinion about the verdict against BUSD; here are a few notable sayings.

  • Crypto analyst Miles Deutscher tweeted – “ … But how on earth is a STABLECOIN considered a security, when it clearly doesn’t meet the Howey Test criteria. No one has ever had “the expectation of profit” when buying $BUSD.”
  • Similarly, the pseudonymous trader Tree of Alpha is also taken aback by this development. He labeled the authority as an “unhinged, unchecked crusade against crypto.” 
  • Meanwhile, iTrader AshWSB dismissed the case as “FUD.” They added, “it’s good to stay informed but don’t make emotional moves.”

About the Verdict

We have talked to cryptocurrency experts about the ruling to determine whether stablecoins are securities. One lawyer points out that since stablecoins are created to store value, holders can profit through arbitrage, hedging and staking.

The Future of BUSD

Paxos is still silent and has not commented on the verdict. However, one thing is evident: Paxos will not mint new BUSD tokens. BUSD’s current market cap is close to $16 billion and occupies the third largest stablecoin after Tether (USDT) and USD coin (USDC). 

Another obvious impact on BUSD is that its market cap will reduce. However, despite the SEC lawsuit, the price may go up due to a supply shortage.

Investing in BUSD

It is not the right time to buy BUSD, as uncertainty prevails around the coin. Although halting minting will reduce supply which may trigger upward prices, it seems unlikely as investors will look to relocate their finances from the BUSD. Therefore, try offloading your BUSD due to uncertainty. However, if you are ready to take a risk with BUSD, this is the ideal time to test your adventure limits.

However, we recommend seeking professional advice before investing in BUSD or related projects.

Parting Thoughts

SEC has recently ramped up regulatory efforts to monitor and control DeFi closely. Over the past few months, SEC has become aggressive in its approach towards the crypto industry. However, the recent verdict has left investors wondering whether to trust other stablecoins are not. Although crypto experts do not accept SEC’s verdict, the law has spoken, and nothing more is needed. 

One thing is certain, the decision equally shakes investors’ trust and market shape. But, since it is a huge coin, there are possibilities that the ruling may get void if tackled by Paxos.

Please share your thoughts about the SEC’s decision in the comment section.