Hey guys, it's Sasha. Binance is in trouble and it seems to be going from bad to worse for the world's biggest crypto exchange, The SEC is going in for an epic Smackdown and there is going to be blood in the streets, Public trust and Binance was already low. after the only auditor who would come within a barge ball of Binance massage published a report into Binance's finances a few weeks ago and then deleted it with no explanation. Well, I think the no explanation bid is explanation enough.

If your auditor deletes the report they made saying your finances are all good, then, well, where their smoke? there's fire. Not that it wasn't completely obvious before, but now the U.S Securities and Exchange Commission has turned up Finally, and the SEC wants to put Binance on a stick and parade the smelly, decaying corpse in front of the entire town. The SEC has just come out and banned the issuance of new Busd tokens, and I am going to explain exactly how bad this is and what the next steps by the SEC are likely to be. Because make no mistake, this is step one of a story that will require a giant bag of popcorn as it unfolds over the coming months and years Now, Don't make the naive mistake of thinking that Busd token has absolutely anything to do at all with Binance.

No, it has exactly nothing to do with Binance whatsoever. Of course, the Cynican. You might think that there is a possibility that Busd is a token that is completely and totally controlled by Binance, but put under the umbrella of a random company called Paxos based in New York And you could suppose that perhaps the SEC thinks so as well and is now giving Binance a giant off roundhouse kick to the face. But of course, that is completely utterly not the case at all.

Busd stands for Binance USD And of course, the word Binance in there means and has absolutely no legal or any other real affiliation Finance whatsoever. In fact, if you go on the Paxos website, it says the Busd is a Binance branded Stablecoin issued by Paxos Trust Company And of course, a Binance branded Stablecoin is not the same thing at all as a Binance owned Stablecoin. There is a big distinction, right? Paxos just license the Binance brand. But Binance has nothing to do with this whatsoever.

which is probably why this other page on the Paxos website looks like this and it says Binance USD is Binance's Stablecoin and is issued in partnership with Paxos Trust Company. So yeah, until it became clear that the SEC is going to come and squeeze Binance's balls so hard the blood will start pouring out of Cz's eyes. they seem to not care about blatantly explaining that this token was in fact Binance's stablecoin. And of course, the moment that the news broke about the SEC preparing to take Binance down CZ Sees Ed the guy who runs that shop went on a Twitter spread to highlight that of course Busd is technically not issued by Binance and has no relation whatsoever to Binance.

No, No, no, no, no. Now here is the actual notice that the New York Department of Financial Services posted about Binance USD The reason they're posting this Because they're technically the regulator here. the SEC does not have jurisdiction, so you might read between the lines as to who's actually doing what Pack Source is a limited purpose. Trust Company Under the supervision of the New York State Department of Financial Services DFS has ordered Paxos to seize minting Paxos it should be.

USD As a result of several unresolved issues related to Pack Sources oversight of its relationship with Binance in regard to Paxos issued Busd. In response, on February 13, 2023, Paxos notified customers of its intent to end its relationship with Binance for Busd. So right in the opening paragraph, it is a patent nuclear. It could not be more clear what the actual deal is.

Nobody cares about Paxos. Nobody at all gives a about that company. This is a hit on Binance. This is a hit on a company that issues this Binance token and Binance, of course, has no formal HQ lives mysteriously in the cloud and ether and no geographical jurisdiction whatsoever.

So the first jab is coming at Paxos. By the way, Paxos issue a basically identical stable coin which is also packed to the dollar code Usdp. They have a page that shows what the difference between Busd and Usdp is and it has no differences whatsoever on it. And of course this notice doesn't give a about Usdp doesn't even mention it because this hit is not on the principle it is not on Paxos.

This is a hit on Binance and whatever's related to finance. The department is monitoring packs us closely to verify that the company can facilitate reductions in an orderly fashion subject to enhance risk-based compliance protocols. So there authorities want to make sure that Paxos is not full of like FDX block fire and all these other guys and that the money is a really there like they keep showing every month kept in cash and cash like instruments instead of you know a giant chunk of it may be mysteriously going missing like what we've seen before at the moment though there is no reason to believe it's not there. They do get audited apparently every month, but it sounds like based on this statement that maybe the SEC ain't so sure.

It is important to note that the department authorized Paxos to issue the USD on the Ethereum blockchain. The department has not authorized Binance Peg Busd on any blockchain and Binance Peg Busd is not issued by Paxos. There is currently no restriction on the listing or exchange in New York of existing Paxos issued Busd by DFS licensed entities. I Love this bid! This is a massive swing of Binance.

They are saying that the official busd that is issued on the Ethereum blockchain is the bit that was authorized and allowed initially by the New York DFS but with restrictions. And here's the thing. according to the latest breakdown from Paxos, there is around 15 and a half billion dollars tied up in Bosd. I Am guessing this number is going down fast right now and based on this table from Ledger insights, almost all of that 13 and a half billion dollars just so happens to sit in these seven wallets owned and controlled by Binance.

What a coincidence! and Binance, of course, issue busd on their own BMB chain as well and control almost all of the supply of the original token in their wallet. and their Regulators have no oversight and no ability to enforce anything on those non-etherian busd versions or even on what Binance goes and does and how they operate. It's a bit like the bank giving you a loan of a million dollars and you have to sign a piece of paper to agree not to use it for anything nefarious. You know it's a million dollars and you agree.

the bank can come and check on what's happening with that money. They can go and look at that million dollars at any time and then the very next day you're going to take that entire million dollars and exchange it in a bank for Euros. Then you go and use those Euros to do a whole bunch of illegal ever, maybe go and do some drug dealing, commit a genocide or two I don't know, do some people trafficking and when the regulator comes and asks you what you're doing with that million bucks, you tell them it's sat there in the bank where you exchanged it for the Euros and it is none of the bank's business as to what it is that you went and did with those Euros The rest of this notice really just explains that all holders of Busd should be able to get their dollars back one to one and Paxos better not do a runner. They literally say the same thing over and over in different words.

And of course, because Paxos is dirty as they have interpreted this notice as giving customers one year to exchange their Busd back into Dollars Busd will remain fully supported by Paxos and redeemable to onboarded customers through at least February 2024. Now I Am not sure what they think is going to happen after February 2024. I Somehow think that the US authorities will not look very kindly on them, just appropriating all of the money that doesn't get exchanged back into dollars in the next year. But this statement from Binance I'm sorry from Paxos does sound like a thinly Veiled Threat to do exactly that.

Now at the same time, it sounds like the SEC is trying to figure out how they can get in the fight directly, not through a third party because they would very much like to give Binance a big smacking it seems. So the problem is that finances opaque structure means that they're not sitting directly under the Sec's jurisdiction. So of course the SEC has gone down the same route and is trying to hit Paxos 2.. In a separate press release, Paxil said that they received a Wells notice from the SEC on February 3rd and apparently this notice said that the SEC is considering taking Paxus to court because B USD is a security and Paxos never registered it as a security.

If this does happen and the SEC does Sue Paxos, this will be probably the case law that will determine what happens with all the other stable coins as well. The truth is, at least Busds sorta based in the US and it's kinda regulated. There are way way worse stable coins way way murkier stable coins out there, like tether that is dirtier than a stripper taking a mud bath. But the SEC doesn't have a way of going after those guys because they have no U.S president at all.

So they picked on the one stable coin that they can go and do a SmackDown on Busd. The court case will come down to whether the technical definition of a security includes Crypto, Stable Coins and all the Crypto Bros are up and down, saying that Crypto Falls outside all regulation Gary Gantzler and SEC can go and do one, but when it comes to stable coins, they may actually be right. The 1933 Securities Act and the 1934 Securities Exchange act have a pretty broad definition of what is a security. It could be any node, stock, treasury, bond, blah blah blah.

The list just goes on and on can be pretty much anything. and so in the 90 years since that definition turned up, the US courts have used the Howie test to decide if something is an investable security and how it has been named after 1946 Supreme Court case called SEC versus W.J Howiko and that test says that to qualify as an investment security, an asset has to satisfy four criteria. The original four criteria from the case they slightly changed the wording on these since then were the existence of an investment contract, the formation of a common Enterprise, a promise of profits by the issuer, and the use of a third party to promote the offering. Now, stable coins do satisfy three of those things: There is a contract, and you are technically making an investment when you go and buy the stable coin.

there is a common Enterprise and you as the buyer, have no control over the operational promotion of the thing that you are buying. But I Think it may be tough to argue in court from my non-legal perspective that stablecoins promise any kind of profits by the issuer, because technically stable coins pegged to the dollar should always be worth one dollar. That's like the point, right? So why is the SEC saying that Busd is a security then? Well, I am not privy to the Sec's internal conversations, but I suspect that it may have something to do with the fact that I mentioned earlier about who owns Busd and more importantly, why they own Busd. Binance owns the vast majority of Busd in existence.

I'm guessing near 100 when you look at all the indirect ownership. And of course, Busd has no investment value in itself. So nobody would go and buy Busd as an actual investment just to hold it for 10 years because you would get no return and you only have the risk of Paxils going bankrupt. It makes zero sense to actually just buy Busd.

So I Guess the logical implication there goes something like this: The vast majority of Busd is bought and held on Binance, with a big chunk of it sitting on other chains than Ethereum. But Ultimately, the only reason that people buy it in the first place is so that they can go and buy all the degenerate that you can buy on platforms like Binance, all of the coins and the tokens named after fluffy dogs or Nfts you know, and entering a database that has a URL that points to a picture of a monkey wearing a funny hat. So Busd is sole purpose is to enable you to buy something from that pile of garbage. And unlike Busd, that pile of garbage does promise return turns.

I Mean just go and look at the promotion for any of this crypto junk, promising to take you to the Moon with one gazillion percent return in the next three months. Enjoy staying poor if you don't buy into the latest fad. So I guess in the eyes of the SEC Busd is just a front. it's cloaking.

It's a Gateway for people buying these promises of getting rich quick. But this is the step before that they have to do in order to enable them to go and buy those things from the bunch of morons living their mom's basements who are basically committing fraud openly by promising these ridiculous returns in the first place and selling hot air. This entire industry is preying on the vulnerable. It is disgusting It is.

Despicable It's preying on people in financial hardship. It's preying on people who want a magic way out of their financial trouble, out of their difficult lives, people who work three jobs and still can't pay their rent or put food on the table for their family. And then there's a degenerate clown on YouTube or on Twitter to saying that if you go and invest in the latest you you know, buy this Jpeg. You will get rich in no time.

So go and do it. and I guess it will be interesting to see if this does go to court and if it does, what happens and which side the Court decides to land on. but at the end of the day I don't actually even think it really matters this I think is just step one after what we saw in the three years since Covet arrived. I think it is becoming more and more clear that something really has to be done about this industry that is basically one giant scam.

Fest I Mean it was patently obvious at the time that a URL of a JPEG of a monkey wearing a funny hat is not in fact an appreciating asset that will be worth millions in the future. but there's an actual fact a joke, but it sounds like The Regulators have finally woken up from their self-induced coma and are now going to do something about it. And Binance being the biggest Exchange in the world seems to be Target Number One Naturally, I am guessing that whatever happens with Paxos is probably going to take forever as big legal fights tend to do, and the outcome is far from certain. but Binance, just like most other crypto exchanges, is an enabler of the trading of dog.

They actively encourage and promote people to invest their hard-earned money in unregulated Ponzi schemes. They make fees from people putting their life savings into the latest pump and dump crypto token. And while those investors lose everything every single time, one of those things inevitably collapses. Binance just keep on sitting there, being the middleman, promoting the next scam and collecting their next paycheck.

The problem with imbeciles who think that they are above the law, who think that promoting scams is okay because you know people should do their own due diligence, bro. The problem with these lowlives is that Karma has a funny way of coming to kick their ass so hard they will have decades to ponder how epic their scam business was staring at the Four Walls of their cell. And I'm hoping that that moment comes sooner rather than later.