• Binance-branded stablecoin BUSD has lost market cap, falling to 4th place among stablecoins.
• The New York Department of Financial Services (DFS) has ordered Paxos to stop minting BUSD tokens due to unresolved issues related to their relationship with Binance.
• The SEC has issued a Wells Notice to Paxos and plans to sue them over the issuance of BUSD, as well as launching lawsuits against Binance and CEO Changpeng Zhao for offering unregistered securities.
BUSD Market Cap Drops
Binance-branded BUSD stablecoin has lost another $1 billion in market cap, descending to the fourth position among stablecoins.The Binance USD (BUSD) stablecoin currently has a market cap of around $4.3 billion, down from $5.5 billion a month ago, data by CoinMarketCap shows.This places BUSD in fourth position among stablecoins and right behind decentralized stablecoin DAI, which has seen its market cap rise to more than $4.6 billion over the past couple of days. Tether’s USDT and USDC Coin (USDC) are the two largest stablecoins in the market, each with a market cap of around $83 billion and $28 billion, respectively.
Paxos Ordered To Stop Minting
In a consumer alert, the DFS said it issued the order “as a result of several unresolved issues related to Paxos’ oversight of its relationship with Binance”. Subsequently, it was revealed that the SEC had issued a Wells Notice to Paxos and plans to sue the company over its BUSD issuance. The agency argued that BUSD is considered an unregistered security.Following the regulatory clampdown, Paxos announced it would “end its relationship with Binance” and would stop issuing new BUSD tokens from February 21st onwards but will continue supporting existing tokens until at least 2024..
SEC Lawsuits Against binance And CEO
The SEC has launched lawsuits against Binance and CEO Changpeng Zhao, accusing them of illegally operating a securities exchange. The agency accused them of breaking the law by offering unregistered securities such as their own token (BNB) and their own stablecoin (BUSD).
UDSDT Balance on Curve 3pool Imbalanced
Last week , USTD balances on Curve’s popular 3pool became heavily imbalanced after it rose up above 70%. This selling pressure came days after USDT hit an all time high in its market capitalization exceeding 83$ billion .
In conclusion , due to several regulatory issues surrounding both Paxos’ oversight with binance as well as binance itself offering unregistered securities , this caused USDT’s peg break for few hours while also leading into NYDFS ordering paxos not issue any new tokens . This led into decreased demand for USDT along with paxos ending relationship between binance .