Several legal battles have reportedly emerged against two altcoin projects traded on Binance. According to various reports, stablecoin issuer Paxos was in the focus of authorities. Here are the details…
These altcoin projects are under scrutiny
According to a report, the New York Department of Financial Services (NYDFS) is investigating stablecoin issuer Paxos. The exact scope of the investigation is unclear. Paxos’ stablecoins include Pax Dollar (USDP), a Binance-branded stablecoin available through a white label service, and Binance USD (BUSD). Rumors have been in the news recently that the U.S. Office of the Currency Controller (OCC), a federal bank regulator, may ask Paxos to withdraw its application for a banking contract. However, Paxos denied these rumors.
However, an ongoing investigation by a state regulator indicates that the company, which received a temporary bank contract from the OCC in 2021, is indeed under closer scrutiny than its peers. Paxos also holds a cryptocurrency license – commonly referred to as BitLicenses – issued by NYDFS. cryptocoin.comAs we reported, NYDFS published stablecoin guidance in June, urging issuers to ensure that stablecoins are fully backed by assets that have been separated from their funds and are regularly certified.
Published after the collapse of the TerraUSD/LUNA stablecoin ecosystem, the guide focuses on asset-backed stablecoins. Superintendent Adrienne Harris said at the time that NYDFS had been working on guidance since before the collapse.
Rumors that Paxos denied
Recently, Paxos insisted that its application for the national trust bank charter is ongoing. The company tweeted, “To clear up the speculation: Paxos was not asked to withdraw the OCC’s application for national trust bank charter and the charter was not rejected. Paxos continues to work constructively with OCC.”
Earlier that day, speculation was swirling in the press and on Twitter that Paxos and other crypto companies were facing a crypto banking coup. Fortune also reported that the status of Protego’s application is unclear. The company received conditional approval from the OCC in April 2021 and gave the green light to divide its operations between two entities, one nationally regulated and the other maintaining its current regulatory structure.
