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SEC Plans to Sue Paxos After Clampdown on BUSD

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The Securities and Exchange Commission (SEC) has indicated interest to file a lawsuit against Paxos, the producer of Binance USD for violating investor protection laws after the regulator had already ordered Paxos to stop minting BUSD.

Citing people familiar with the matter, the Wall Street Journal reported that a “Wells Notice” has already been served to Paxos, meaning that the stablecoin issuer will now need to gear up for the coming lawsuit.

Investors King understands that BUSD is a stablecoin pegged to the US Dollar. Developed by both Binance and Paxos, it is the third-largest stablecoin by market capitalization.

According to a report from Wall Street Journal, SEC is alleging that BUSD is unregistered security, thereby, making it unsuitable for public consumption. 

The Securities and Exchange Commission believes that BUSD is a security and that Paxos failed to register it with the agency before offering it for sale in September 2019.

Following the news of SEC’s intentions, Paxos said it would halt the minting of new BUSD tokens. A development some crypto maximalists saw as a win for the US Securities and Exchange Commission as the regulatory body takes a more aggressive step against cryptocurrency. The securities watchdog has been swift in its desire to bring crypto players under control.

It would be recalled that last week, the Securities and Exchange Commission also stretched its light on Kranken, a major cryptocurrency exchange in the United States, leading to a settlement of $30 million.  

Announcing the clampdown on BUSD, the Chief Executive Officer, (CEO) of Binance, C Z also tweeted stating that  “We were informed by Paxos they have been directed to cease minting new BUSD [Binance’s stablecoin] by the New York Department of Financial Services,” Zhao said on Twitter.

Meanwhile, the spokesperson for Pasox has confirmed the readiness of the company to pursue the case within the ambit of the law if need be. “We will engage with the SEC staff on this issue and are prepared to vigorously litigate if necessary”. 

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Crypto Money Laundering Down by 29% in 2023

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Crypto Exchange - Investors King

According to recent findings from blockchain research firm Chainalysis, cryptocurrency money laundering activities experienced a significant downturn in 2023, dropping by 29% compared to the previous year.

In the report released on Thursday illicit funds laundered through cryptocurrency exchanges plummeted from $31.5 billion in 2022 to $22.2 billion in 2023.

Chainalysis attributed this decline to a general reduction in both legitimate and illicit crypto transaction volumes throughout the year.

The research platform highlighted that centralized exchanges remained the primary destination for funds originating from illicit sources, a trend that has persisted over the past five years.

However, there was a notable shift in the distribution of illicit funds, with an increasing proportion flowing into decentralized finance (DeFi) protocols.

The report suggested that this shift was influenced by the transparency inherent in DeFi platforms, making them less favorable for concealing the movement of funds compared to traditional exchanges.

Furthermore, Chainalysis noted changes in the methods used for laundering illicit cryptocurrency.

The report observed a significant rise in funds being channeled through cross-chain bridges from addresses associated with stolen funds.

Also, there was a notable increase in funds originating from ransomware attacks being directed towards gambling platforms and bridge protocols.

In terms of concentration, the report highlighted that 109 exchange deposit addresses received over $10 million worth of illicit cryptocurrency each, collectively receiving $3.4 billion in illicit funds in 2023.

This represents a considerable increase compared to 2022 when only 40 addresses received similar amounts.

The findings underscore evolving trends in cryptocurrency laundering and signal a growing sophistication in illicit financial activities within the digital asset space.

Regulatory bodies and law enforcement agencies continue to grapple with emerging challenges posed by crypto-related crimes as the landscape evolves.

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Binance Reaffirms Commitment to Fraud-Free Trading Amid Nigeria’s Currency Concerns

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In response to growing concerns about exchange rate manipulation in Nigeria, Binance, one of the world’s leading cryptocurrency platforms, has issued a resolute statement reaffirming its commitment to maintaining a fraud-free trading environment.

The announcement comes amidst reports of heightened tensions regarding the devaluation of the Nigerian currency and suspicions of illicit activities on digital asset platforms.

Binance emphasized its dedication to providing users with a market-driven, transparent, and manipulation-free platform.

The company stressed its unwavering responsibility to safeguard users against fraudulent behavior and ensure the integrity of the trading ecosystem.

Binance asserted that any users found engaging in malicious or manipulative activities would face swift removal from the platform in line with its zero-tolerance policy for market manipulation.

The cryptocurrency exchange also highlighted its ongoing investment in enhancing processes and tools aimed at preventing fraudulent practices.

Measures include setting upper limits for advertisements, implementing rigorous ad screening procedures, and increasing deposit requirements for merchants posting ads.

As industry leaders, Binance reiterated its commitment to working closely with stakeholders to promote innovation while prioritizing user protection.

The platform assured users of its adherence to strict global security protocols across all products and services offered.

Binance’s statement underscores its proactive stance in addressing concerns related to market manipulation, emphasizing transparency, accountability, and the preservation of market integrity in Nigeria’s evolving cryptocurrency landscape.

Meanwhile, there were unconfirmed reports that the Nigerian government is considering blocking Binance and other cryptocurrency platforms amid concerns over alleged forex market manipulation and illicit financial activities.

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Nigeria Mulls Blocking Binance, Crypto Platforms Over Forex Manipulation

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Nigeria’s government is contemplating the drastic step of blocking Binance and other cryptocurrency platforms amid concerns over alleged forex market manipulation and illicit financial activities.

According to officials familiar with the matter, the move comes as the Nigerian currency experiences an unprecedented depreciation to an all-time low of N1,800 against the dollar in the parallel market.

Presidential and regulatory sources have cited reports indicating that currency speculators and money launderers are exploiting platforms like Binance to orchestrate criminal activities, which are believed to be contributing to the naira’s weakening.

Binance, a prominent digital assets platform, facilitates peer-to-peer transactions, allowing users to advertise their interest in buying or selling currencies.

Despite a warning issued by Nigeria’s Securities and Exchange Commission (SEC) in September 2023, cautioning against Binance’s operations as illegal, the platform continued to operate, drawing significant patronage, especially among urban youths and suspected speculators and money launderers.

Officials have raised concerns not only about economic sabotage but also about national security implications as these platforms are reportedly used by criminal groups for activities such as ransom payments.

Law enforcement sources have described the exploitation of digital asset platforms as a sophisticated scheme against the Nigerian economy, involving the manipulation of forex values through fake deals to influence market dynamics.

A senior executive at the Central Bank of Nigeria (CBN) emphasized the troubling trend of the naira’s depreciation, attributing it to artificial devaluation caused by speculative sites like Binance.

The potential ban on Binance and other crypto firms could follow actions taken by other countries like Malaysia, France, and Malta, which have implemented restrictions on such platforms due to similar concerns.

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