Feb. 13, 2023: Is it BUSD-in? 💵👮
Crooked regulators gun down Paxos in hunt for $BUSD
Washington’s technophobic technocrats continue their unhinged fatwa against cryptocurrency. After extorting $30MM from Kraken last week, this week they turn their sights on, of all entities, Paxos.
The attack is unusual… and notably cruel. Paxos was one of the most highly regulated and boring players, playing strictly by the rules.
The most common sentiment was utter disbelief. Most people with only passing familiarity of securities law are familar with the “Howey Test,” which a stablecoin obviously fails under the “expectation of profit” section.
However, the Howey Test applies only to “investment contracts,” which is merely one item on a laundry list of securities.
The argument likely being pressed by court eunuch Gary Gensler is that $BUSD is structured as a money market fund.
And thanks to executive overreach, the SEC has broad power in declaring everything a security.
And for better or worse, the US has a long history of protecting its currency. While its actions may be counterproductive from a policy standpoint, the US has a fairly length history of law to protect its ability to mint dollars.
The good news, which is in scarce supply on the regulatory front of the vicious crypto world, is that this action appears mostly aimed at targeting $BUSD.
Unfortunately for the industry, the SEC has deep pockets, and has all the money it needs to satisfy its blood-sopped vendetta against crypto. The story of Kraken was the company forced to surrender due to having insufficient resources to fight back.
It’s unclear whether Paxos will also choose to fight back. The company has agreed to stop issuing $BUSD, which blows a major hole in its business model. How can it afford to finance an expensive and potentially multiyear lawsuit under such conditions?
Binance is standing back, asserting this is between Paxos and the US, and that it will monitor and adjust its listings as needed.
For its sake, Coinbase has signalled resistance, and likely would fight if attacked.
As usual, the people really taking it on the chin are everyday Americans. If a firm as innocuous as Paxos cannot operate, it’s literally impossible for any crypto company to be based in America.
In a way it’s a useful distinction. Better that crypto move away from centralized services. Better that companies make harbor in ascendant domiciles, as opposed to crumbling empires. At this rate, America’s only hope for continued dominance is to #DefundTheSEC.
Surprising the regulators aren’t adopting a different spin…