Amid NY Lawsuit Against Bitfinex And Tether, $10 Million In Paxos Standard (PAX) Stablecoin Printed
Amid NY Lawsuit Against Bitfinex And Tether, Paxos Launches $10 Million In Stablecoins
Yesterday, The Block reported on a lawsuit initiated by the NY Attorney General against Bitfinex and Tether. Over the course of a 23-page document, the filing explains that the office believes that Bitfinex has been allowing traders in New York to trade, even though this has been prohibited.
The Attorney General presently is investigating the potential for “ongoing fraud being carried out by Bitfinex and Tether.” The NYAG also claimed that Bitfinex had lost $850 million in their funds to a payment processor. To make up for the losses, Bitfinex allegedly borrowed Tether’s reserves.
Now, in an article from The Block today, the publication is saying that other stablecoin issuers are staying away from all of the drama, especially Paxos. CEO Charles Cascarilla commented that he was not surprised, adding that there are billions of dollars in cryptocurrency involved in trading every day. The decisions for these traders to completely trust exchanges and stablecoins with no oversight at all and with no licenses is “reckless” and “bad for business.”
Cascarilla explains that the platform “knew this was coming,” and that they have been waiting for the chance. All of the Paxos exchange is created “within the framework of regulation and oversight” for the itBit exchange and the PAX stablecoin. The PAX stablecoin is one of only two stablecoins that New York has approved to be available in the state.
Following the allegations, Paxos minted over 10 million PAX stablecoins in the last 19 hours. Cascarilla explained that the platform experienced a substantial rise in demand overnight, adding that “a lot of minting” occurred through today and last night. However, he clarified that the company never “pre-mints” the stablecoin, and only increases with rising demand from the public.
The majority of the issuance of the new tokens were minted after the news of the Tether lawsuit came out, and is attributed to four specific transactions, which can be viewed here: https://etherscan.io/tx/0x87bb42ad18dbe68448372577c26883c97730d3520141c0af6381316ea5bfa50
Tether has had plenty of controversy around it for a while, despite consistently claiming that the entirety of almost 3 billion in circulating Tether tokens are backed by USD at a 1-to-1 ratio. However, the new lawsuit brings up a lot of the drama and rumors that previously plagued the stablecoin, leading traders away from it to find other solutions. In fact, TokenAnalyst.io reported that stablecoins other than Tether have been seeing increases in volume for the last 24 hours.
Jesse Proudman, the CEO of Strix Leviathan, commented that the recent allegations have created concerns over the reserves that Tether actual has.
Ultimately, Leviathan explained that the market essentially expects that
“This action will cause capital to migrate from Tether to regulated and fiat-backed stable coins like USDS, USDC, TUSD, and PAX.”