Thread by @realMatrixport

🚨 Paxos-Binance USD Issue Sparks Concerns over Stablecoin Oversight and Backing 🤔

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🔢 What You Need to Know in 10 Bullet Points: 📝

#BUSD #Paxos #Binance #Stablecoins #Crypto 💰

1/ 🟢 #Paxos, a regulated trust company based in New York, issues and redeems the dollar-backed token #BUSD, licensed to be called "#BinanceUSD," a #stablecoin.

2/ 📉 In the past 24 hours, #BNB has dropped -6%, and around $2.4bn of shorts have been put on. But the issue does not appear to be around #stablecoins per se, what the market initially feared, but rather that #Paxos was not stringent enough with its oversight of the #BUSD.

3/ 🔎 #Paxos had violated its obligation to conduct tailored, periodic risk assessment and due diligence of #Binance and Paxos-issued #BUSD customers.

4/ 💰 #BUSD has issued $11bn on #Ethereum, but $4.8bn has also been accounted for by an issuance on #BSC, the #Binance Smart Chain, in a tokenized version of BUSD called ‘Binance-peg BUSD’.

5/ 📈 This ‘peg’ version has made #BUSD available on the #Binance #SmartChain and accounts for roughly a third of the BUSD issuance now.

6/ 🤔 #NYDFS is now worried that the $4.8bn might not be properly backed or have had issues with being 1:1 backed.

7/ 💸 On January 24, it was reported that ‘#Binance mistakenly mixed #crypto exchange’s customer funds with B-token collateral’. A Binance spokesperson acknowledged this error and said the exchange is in the process of correcting the error.

8/ 🛑 On February 6, ‘#Binance to suspend #USD bank transfers from Feb 8 onwards to last ‘a couple of weeks’ until New Banking Partner is established.

9/ ⚖️ On February 12, ‘#Crypto firm #Paxos faces #SEC lawsuit over #Binance #USD token’.

10/ 🚨 #Binance has shot itself a little bit in the foot here but they are working on it and it should be resolved. So should we be really worried? I don’t think so. We are no longer in a #bearmarket where you worry about downside, in #bullmarkets, you focus on the upside.

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#BUSD #Paxos #Binance #Stablecoins #Crypto