Circle Warned New York Regulator About BUSD Stablecoin
Circle, the issuer of the USDC stablecoin, reportedly alerted the New York Department of Financial Services (NYDFS) months ago about Binance operating the competing BUSD stablecoins with undercollateralized reserves. In the wake of the investigation of Paxos Trust, the issuer of the Pax Dollar (USDP) and Binance USD (BUSD) stablecoins, it has been revealed that Circle tipped off New York’s top financial regulator about the BUSD reserves. Bloomberg reported that Circle complained to the NYDFS in the fall of 2022 that blockchain data showed that Binance did not have enough reserves to back up the BUSD tokens it had issued through Paxos. While the tip-off from Circle came in the fall, Binance acknowledged in January 2023 that there were times when its Binance-peg BUSD was not fully backed. However, the reports claim it was worse than Binance affirmed. According to Circle, at one time, Binance, the world’s largest crypto exchange, once supported as much as $1.7 billion worth of the stablecoin using only $100 million worth of actual USDC as collateral. The report comes only a day after we reported that Paxos was ordered by the NYDFS to stop issuing BUSD stablecoins and is being investigated by the Securities and Exchange Commission for offering unregistered securities. According to the regulators, the stablecoin issuer did not operate BUSD “in a safe and sound manner based on extensive supervisory engagement,” and couldn’t resolve issues related to Paxos-issued BUSD in a timely fashion. As part of the crackdown, Paxos will stop minting new BUSD from February 21st. However, users of the stablecoin have at least a year to cash out their holdings for either dollars or its other stablecoin, the USDP. As a result, Binance has seen a surge of withdrawals over the last 24 hours as users cash out their BUSD holdings. While the BUSD has held on to its dollar peg, the market cap of the stablecoin has fallen from $16.15 billion to $15.6 billion in the last day. The 24-hour market cap chart for Binance USD (BUSD). Source: CoinMarketCap With Paxos winding down operations of BUSD, Circle’s USDC, delisted by Binance in the ongoing stablecoin war, could become the biggest beneficiary. Read more about Paxos’ regulatory challenges below: Learn about the Binance and Circle saga in:
Circle Tipped Off the NYDFS
Binance Has Undercollateralized Reserves
Paxos Investigated, Ordered to Stop BUSD Issuance
On the Flipside
Why You Should Care
New York Regulators Launch Investigation into Stablecoin Issuer Paxos
Circle Attributes Losses and Bad Projections to Binance Conversions
Read more: https://dailycoin.com/circle-warned-new-york-regulator-about-busd-stablecoin/
Text source: DailyCoin.com
