> ## Content Index > Fetch the complete content index at: https://www.metatalks.ai/llms.txt > Use this file to discover other available public pages before exploring further. # US Financial Watchdogs Switch to the Warpath - URL: https://www.metatalks.ai/us-financial-watchdogs-switch-to-the-warpath/ - Published: 2023-02-13T14:45:37.000Z - Updated: 2023-02-13T14:45:37.000Z - Author: Katelyn Chow - Tags: SEC, #helen, BUSD, binance The US financial regulatory authorities have recently been taking a more active stance against crypto exchanges and their offerings to the public. The Securities and Exchange Commission (SEC) has accused the Kraken exchange of selling unregistered investment contracts to investors, and as a result, the operating companies, Payward Ventures and Payward Trading, have agreed to pay a $30 million fine and shut down a staking service that was providing a yearly return of 21% to investors. The SEC's complaint stated that since 2019, Kraken has been offering staking services to the general public, which involves aggregating certain crypto assets from investors and staking them on their behalf. SEC Chair Gary Gensler commented that crypto intermediaries need to provide the necessary disclosures and safeguards required by securities laws when offering investment contracts in exchange for investors' tokens, regardless of whether it's through staking-as-a-service, lending, or other means. In a separate but related move, the New York Department of Financial Services (NYDFS) is investigating a Binance-branded stablecoin, BUSD, which is issued by Paxos. On February 13, the SEC issued a wells notice to Paxos alleging that BUSD is an unregistered security, and on the same day, the NYDFS ordered Paxos to halt the issuance of BUSD. In response, Paxos announced that it would end its relationship with Binance for the BUSD stablecoin, and cease the issuance of new tokens starting February 21\. However, Paxos Trust, a regulated institution overseen by the NYDFS, will continue to manage the dollar reserves that back BUSD. Binance CEO Changpeng Zhao emphasized that BUSD is a stablecoin wholly owned and managed by Paxos and does not meet the criteria of an unregistered security, as defined by the Howey Test. Binance was quick to distance itself from the troubled stablecoin, emphasizing that it is issued and managed entirely by Paxos. > [#BUSD](https://twitter.com/hashtag/BUSD?src=hash&ref%5Fsrc=twsrc%5Etfw&ref=metatalks.ai). A thread. 1/8 > > In summary, BUSD is issued and redeemed by Paxos. And funds are [#SAFU](https://twitter.com/hashtag/SAFU?src=hash&ref%5Fsrc=twsrc%5Etfw&ref=metatalks.ai)! > > — CZ 🔶 Binance (@cz\_binance) [February 13, 2023](https://twitter.com/cz%5Fbinance/status/1625067484368740353?ref%5Fsrc=twsrc%5Etfw&ref=metatalks.ai) Binance CEO Changpeng Zhao posted a tweet where he explained the position of the crypto exchange regarding the situation with BUSD. According to him, BUSD is a stablecoin wholly owned and managed by Paxos and its market cap will decrease over time following the mining halt. Zhao added that he generally agrees that BUSD doesn't meet the Howey Test criteria as an "unregistered security" with no one among investors having expectations of profit when buying BUSD. These expectations are one of four criteria mentioned by the Supreme Court to detect unregistered securities. > The SEC has labelled BUSD as an “unregistered security”, and is suing its issuer, Paxos. > > But how on earth is a STABLECOIN considered a security, when it clearly doesn’t meet the Howey Test criteria. > > No one has ever had “the expectation of profit” when buying [$BUSD](https://twitter.com/search?q=%24BUSD&src=ctag&ref%5Fsrc=twsrc%5Etfw&ref=metatalks.ai). [pic.twitter.com/QXOlDUyvc3](https://t.co/QXOlDUyvc3?ref=metatalks.ai) > > — Miles Deutscher (@milesdeutscher) [February 13, 2023](https://twitter.com/milesdeutscher/status/1624953792872718336?ref%5Fsrc=twsrc%5Etfw&ref=metatalks.ai) Coinbase CEO Brian Armstrong also commented on the SEC's recent actions, warning that similar enforcement actions against other exchanges could be on the horizon. Armstrong argues that staking services are not securities and provide benefits such as increased security and a reduced carbon footprint. He believes that new technologies should be encouraged in the US and not held back by unclear rules. > 1/ > SEC is suing Paxos, an issuer of stablecoin [#BUSD](https://twitter.com/hashtag/BUSD?src=hash&ref%5Fsrc=twsrc%5Etfw&ref=metatalks.ai), for offering unregistered security > > Once again, a gov. institution causes disruption & uncertainty in the market, negatively impacting retail investors > > 👇is a wrap-up of everything you need to know about the situation > > 👇🧵 [pic.twitter.com/8HH6oocL8N](https://t.co/8HH6oocL8N?ref=metatalks.ai) > > — jacksage.eth 🇵🇹🇵🇱 (@jacksage\_NFT) [February 13, 2023](https://twitter.com/jacksage%5FNFT/status/1625121514646298624?ref%5Fsrc=twsrc%5Etfw&ref=metatalks.ai) The recent SEC announcement had a significant impact on the price of Bitcoin, which fell sharply by 6% or $1,200, from $22,950 to $21,790\. > 0xScope shared data on Twitter showing that over $500 million in [#Ethereum](https://twitter.com/hashtag/Ethereum?src=hash&ref%5Fsrc=twsrc%5Etfw&ref=metatalks.ai) and [#BNB](https://twitter.com/hashtag/BNB?src=hash&ref%5Fsrc=twsrc%5Etfw&ref=metatalks.ai) have been withdrawn from Binance in 1 hours time. > > My main guess the reason for this is the recent [#BUSD](https://twitter.com/hashtag/BUSD?src=hash&ref%5Fsrc=twsrc%5Etfw&ref=metatalks.ai) FUD. > > If you ask me, it's pure FUD and nothing serious. Funds seem to be SAFU. [pic.twitter.com/w6ce7M8jwV](https://t.co/w6ce7M8jwV?ref=metatalks.ai) > > — Sjuul | AltCryptoGems (@AltCryptoGems) [February 13, 2023](https://twitter.com/AltCryptoGems/status/1625114698847846402?ref%5Fsrc=twsrc%5Etfw&ref=metatalks.ai) This demonstrates the sensitivity of the crypto market to regulatory developments and highlights the importance of clear and concise regulations in the industry.