Stablecoin issuer Paxos said Monday that it received a Wells Notice from the U.S. Securities and Exchange Commission on Feb. 3, confirming a report by the Wall Street Journal on Sunday. The notice said that the SEC is considering recommending an action alleging that Paxos failed to register BUSD, a stablecoin issued by Paxos and branded by the world’s largest crypto exchange Binance, as a security.
A Wells Notice from the SEC is a formal notice that informs a recipient of potential charges the regulator may bring against them. “Paxos categorically disagrees with the SEC staff because BUSD is not a security under the federal securities laws,” Paxos said in the Monday statement. “We will engage with the SEC staff on this issue and are prepared to vigorously litigate if necessary,” the company said. The SEC Wells notice is only relevant to BUSD, and not related to other products Paxos offers, such as another stablecoin called Pax Dollar, according to Paxos. BUSD is a stablecoin “wholly owned and managed by Paxos,” a Binance spokesperson said.