The story with BUSD from Paxos and Binance illustrates the absurd approach of the Securities Commission to regulating the crypto sphere. Still, in early 2023, SEC representatives made it clear to company representatives that they considered BUSD to be an unregistered security.

And since Paxos did not receive the relevant regulatory authorisation, the distribution of the asset could lead to litigation.

Paxos CEO Charles Cascarilla

As a result, Paxos agreed to stop issuing new coins and continue redemption and conversion operations until at least February 2024. In this way, users could exchange BUSD for dollars, but new tokens were no longer being issued, causing the supply of stablecoins to only dwindle over time.

However, in July 2024, the Securities Commission announced the end of its investigation into Paxos and its steiblcoin. The regulator’s verdict is that BUSD is not a security, and therefore the SEC’s charges were not justified.

The BUSD steiblcoin page on the Paxos website

However, since then, BUSD still hasn’t released any new tokens, which means the regulator killed the popular crypto project one way or another.

What is Binance’s BFUSD

A well-known news aggregator from the world of cryptocurrency called ZOOMER published the following tweet.

Binance will launch a new stablecoin with an annualised yield of 19.55 percent.


The publication hinted that BFUSD holders will be able to store the steibles or place them in a special vault that will generate returns for investors.

The news sparked a wave of criticism from cryptocurrency users who experienced the collapse of the Terra ecosystem in 2022. At that time, the latter’s key DeFi product was the Anchor protocol, which brought 20 per cent annual returns for holders of the TerraUSD (UST) stablecoin.

Terra LUNA platform co-founder Do Kwon

However, the UST exchange rate then experienced a decoupling from the value of the dollar, leading to the collapse of the ecosystem and the general collapse of the cryptocurrency market. Two anonymous large traders were behind this, triggering the first stackable collapse.

Terraform Labs and three related players then purchased UST for $2 billion to restore the asset’s value. However, this did not save the situation. Sales by worried investors collapsed the value of TerraUSD once again.

Well, due to its connection with the mechanism of issuing the LUNA token, the supply of the latter increased significantly, which led to the collapse of the exchange rate. If at the peak of 5 April 2022, the value of LUNA was $119, by mid-May the rate fell to $0.00019.

Graph of changes in the value of the cryptocurrency Terra LUNA

Since then, crypto traders have been clearly convinced that stablecoins with similar high and stable yields are scams, and in this case, the investments of new investors bring income to old ones. That’s why the news about the possible launch of Binance’s “steiblcoin” with almost similar profitability caused panic of experienced players.

For example, a user under the nickname RunnerXBT posted the following quote, which mentioned the collapse of the Terra ecosystem. His rejoinder is cited by Cointelegraph.

And what was the yield of…the protocol…Anchor?

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One of the early users of cryptocurrencies, Jameson Lopp, shared news about the upcoming release of Binance’s BFUSD stablecoin with a yield of 19.55 per cent per annum, which can also be used as collateral for new loans.

He complemented his post with a meme popular in the crypto community in which a goose asks “where the yield comes from.” He hints that the source of profit for some market participants is new investors, meaning the scheme is a scam.

Meme about the source of income of various cryptocurrency projects

However, Binance representatives have calmed down all the commenters. Here is their retort from Twitter.

BFUSD still hasn’t launched.

In general, it is not a stablecoin, but a rewarding margin asset for futures trading.

We’re excited about the community’s interest in the product and will share more details soon, including details of annualised returns.

However, some readers were dissatisfied with this response. In their opinion, it is impossible to guarantee such a high yield without any tricks. Although it is worth waiting for the company’s explanation in any case.

The head of the crypto exchange Binance Richard Teng


The fears of crypto investors are understandable, as the collapse of Terra LUNA in May 2022 was one of the triggers of the previous bearish trend and the collapse of the digital asset market. Binance, however, is unlikely to be expected to do the same. Firstly, the platform survived the end of 2022, when many well-known representatives of the niche spread false information about the alleged unsecured nature of the exchange. Secondly, Binance co-operates with global regulators, so you should not expect a dubious fraudulent product from the company.
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