# SEC to Sue Paxos for Allegedly Selling Unregistered Crypto Token
The United States Securities and Exchange Commission (SEC) has announced today that it has filed a lawsuit against the stablecoin issuer [Paxos](https://www.paxos.com/) for allegedly selling an unregistered security.
The SEC alleges that Paxos and its subsidiary had issued and sold the BUSD token, a U.S. dollar-backed stablecoin, without registering it as a security with the agency. The SEC is seeking injunctive relief and monetary penalties against Paxos.
## Background on Paxos
Paxos is a financial technology company founded in 2012 and based in New York. The company offers a variety of products and services, including a cryptocurrency exchange, crypto custody, and digital asset settlement services.
In 2019, Paxos launched BUSD, a U.S. dollar-backed stablecoin. The BUSD token was intended to be used as a medium of exchange on the Ethereum blockchain.
## SEC Lawsuit
The SEC contends that Paxos and its subsidiary should have registered BUSD as a security prior to offering it for sale to the public. According to the SEC’s complaint, “Paxos and its affiliates sold BUSD tokens to the public without registering the offering with the Commission.”
The SEC is seeking injunctive relief and monetary penalties against Paxos for failing to register the token as a security. The SEC also noted that this lawsuit should serve as a warning to other companies contemplating similar activities.
## Statement from Paxos
In response to the lawsuit, Paxos released a statement saying, “We are deeply disappointed that the SEC has chosen to pursue this action. We believe that our activities related to BUSD were fully compliant with all applicable laws and regulations, and we intend to vigorously defend ourselves in this matter.”
This lawsuit is yet another reminder of the importance for companies to comply with securities laws when offering digital assets to the public. It remains to be seen how this case will unfold, but it is likely that the SEC will continue to take a hard line on companies that fail to adhere to its regulations.