Paxos has completed the burn of over $700 million worth of Binance-branded stablecoin BUSD, the world’s third largest stablecoin, as part of its compliance with the regulators’ orders.
Data from blockchain intelligence firm Nansen shows that a wallet belonging to the crypto exchange and stablecoin issuer transferred $703 million worth of BUSD tokens to a burn address. The token burn, the process of permanently removing coins from their circulating supply, was made in nine transactions within 27 hours starting Monday morning.
Over 700 million BUSD, or four of its total supply, was intended to be deleted from circulation through the burning process, which eventually keeps only $14.59 billion worth of BUSD in circulation.
Binance, the world’s largest cryptocurrency exchange by trading volumes, launched its native stablecoin back in 2019. BUSD was built in association with US-based Paxos, which serves as its issuer as well as custodian of fiat reserves. Since then, the $16 billion stablecoin has been up for direct purchase and redemption on the Paxos platform, as well as for trading on Binance.com.
The development comes shortly after the New York Department of Financial Services (NYDFS) ordered Paxos Trust Co., which has its own stablecoin, Pax dollar (USDP), to stop minting any new BUSDs. To assure holders, Binance said that Paxos will continue to manage redemptions of BUSDs.
The SEC also plans to sue Paxos for violating investor protection rules. The issuer was already told of the planned enforcement action as the regulator claims that Binance USD is an unregistered security.
Pasox has refuted the SEC’s claims and noted that it” categorically disagrees with the SEC staff because BUSD is not a security under the federal securities laws.” The company added that the SEC Wells notice pertains only to BUSD and there are no other allegations against its business.
“Paxos has always prioritized the safety of its customers’ assets. BUSD issued by Paxos is always backed 1:1 with US dollar-denominated reserves, fully segregated and held in bankruptcy remote accounts. We will engage with the SEC staff on this issue and are prepared to vigorously litigate if necessary,” it added in a corporate statement.
The full scope of the investigation is unclear. But the US regulators have been questioning crypto firms over their practices around handling clients’ digital assets. The probe has gathered pace in the wake of the collapse of Sam Bankman-Fried’s crypto empire.