### Circle's complaint was the impetus for the New York Department of Financial Services (NYDFS) and Securities and Exchange Commission (SEC) filing an enforcement action against the stablecoin issuer, Paxos.

According to Bloomberg’s report in 2022, Circle alerted NYDFS in a complaint that Binance’s reserves were insufficient to support its tokens, seemingly including stablecoin Binance USD.

As a result, Paxos was given an order by the Department to stop minting BUSD and correct serious flaws that called for further action. The Department is keeping a close eye on Paxos to make sure the company can allow redemptions in a systematic way, subject to enhanced, risk-based compliance processes.

Circle is a financial technology company that provides various services related to cryptocurrencies and blockchain technology and is a stablecoin issuer of USDC. Therefore, the company is a direct competitor of Paxos.  Circles’s actions are what likely caused fear, uncertainty and doubt in the stablecoin market, causing BUSD to depeg as low as 0.9994.

The competition among various stablecoin issuers is to maintain the stable value of their native stablecoins. These issuers seek to establish dominance in the market and to become the preferred stablecoin for various use cases such as payments, remittances, and decentralized finance (DeFi) applications.

The competition among stablecoins will heat up as each stablecoin issuer is incentivized to improve their technology, transparency, and regulatory compliance to gain an edge in the market. It is likely that quality, and not destructive action against a competitor, will emerge as the win condition in the stablecoin war. 

Circle's complaint was the impetus for the New York Department of Financial Services (NYDFS) and Securities and Exchange Commission (SEC) filing an enforcement action against the stablecoin issuer, Paxos.

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Sat Feb 18 2023 Stablecoin Wars: Controversial Complaint From Competitor Led To Paxos' BUSD Discontinuation

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Prototype Global Cryptoasset Mapping System Developed

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Sat Feb 18 2023

Stablecoin Wars: Controversial Complaint From Competitor Led To Paxos' BUSD Discontinuation