Binance stablecoin backer ordered to stop issuing token – Binance CEO
One AmericaDec 23, 2022
The Facts
The New York Department of Financial Services (NYDFS) — NY’s chief financial regulator — has ordered the firm behind Binance's stablecoin to stop issuing the token after finding it could not do so in a "safe" manner.
Paxos — which issues Binance Stablecoin (BUSD) — has announced it will cease minting new BUSD tokens as of Feb. 21, after the NYDFS released an investor alert citing concerns “related to Paxos’ oversight of its relationship with Binance.”
The Spin
Narrative A
Through its administration of the Binance stablecoin, Paxos failed to fulfill its obligation to conduct tailored, periodic risk assessments, leaving the token vulnerable to bad actors. There have been numerous problems with the way Paxos administered BUSD which is why it must stop issuing the stablecoin.
Narrative B
Paxos prioritizes the safety of its customers' assets above all and has already agreed to comply with the NYDFS regulation. Despite questions about its handling of the tokens, all Paxos-issued BUSD tokens are backed 1:1 with US dollar-denominated reserves.
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