Bloomberg: U.S. regulator launches investigation into Binance USD, a stablecoin issuer
The New York State Department of Financial Services said it could not comment on ongoing work on the matter
Paxos Trust, an issuer of the Binance USD stablecoin, has been the subject of an investigation by the New York State Department of Financial Services (NYDFS), Bloomberg reports, citing a source familiar with the matter.
Paxos is the issuer of the Binance USD (BUSD) and Pax Dollar (PUSD) stablecoins. According to CoinGecko, the coins have a market capitalization of $16.1 billion and $856 million, respectively. The company claims that the reserves of both of the U.S. dollar-linked coins it issued consist entirely of U.S. Treasury securities and cash.
In 2019, the company issued a Pax Gold token (PAXG), which is backed by physical gold. It is capitalized at $493.9 million.
New Dollars. What you need to know about Stablecoins in 2023
The exact purpose and scope of the probe is not yet clear, the regulator said it could not comment on the ongoing investigation into the matter.
"The department is in constant contact with supervised entities to understand the vulnerabilities and risks to consumers and institutions associated with the volatility of the crypto market," a NYDFS spokesperson said.
Paxos launched itsBit trading platform in 2012 and in 2015 received a license from the NYDFS that allows cryptocurrency-related activities in New York State.
According to Bloomberg, the company this week denied rumors of a possible withdrawal of that license application. Paxos stressed that it maintains a constructive relationship with the regulator.
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