Circle not under SEC’s probe, says its strategy officer

abdelaziz Fathi

Dante Disparte, the chief strategy officer of Circle, denied the rumors that the dollar-pegged stablecoin issuer received a “Wells Notice” from the US Securities and Exchange Commission (SEC).

Fox Business reporter Eleanor Terrett first broke the news yesterday, claiming that the US top watchdog ordered Circle to stop selling USD Coin (USDC) as it is allegedly an unregistered security.

In the now-deleted tweet, Terrett claimed that the SEC had sent legal notices to inform multiple US-based stablecoin issuers, including Circle, about charges that may be filed against them. According to the reporter, these firms had been ordered to cease and desist sales of “unregistered securities”.

The post swiftly spread on the social media as the Fox journalist has grown popular for her extensive coverage of the regulatory actions against crypto firms. As such, Circle’s executive was quick to react, denying that they received a notification from the SEC that the agency planning to launch an enforcement action against his company.

After the rumors have been quashed by the USD Coin issuer, Terrett deleted the original thread, apologized for the mistake and her account was briefly deactivated.

The move comes a few days after reports surfaced that the NYDFS is investigating Paxos, possibly over whether it was meeting rules around custody of Binance BUSD. Shortly after that, a Bloomberg report claimed that it was rival stablecoin issuer Circle that sounded an alarm.

Per the report, Circle complained to the New York regulators that Binance did not have enough reserves to back up the BUSD tokens. However, Binance CEO Changpeng Zhao, while addressing ongoing FUD around the stablecoin, said there is no substance to recent rumors that Circle founder Jeremy Allaire secretly told NYDFS to look into Paxos and BUSD.

An NYDFS spokesperson declined to comment on ongoing investigations but added that “The department is in continuous contact with regulated entities to understand vulnerabilities and risks to consumers and the institutions themselves from crypto market volatility we are experiencing.”

After the collapse of the Terra algorithmic stablecoin in May, which wiped billions off the broader cryptocurrency market, NYDFS refocused attention on the $150 billion stablecoin industry. Since then, regulators have been concerned that stablecoins without sufficient reserve-backing are prone to bank runs.

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