Stablecoin issuer Circle filed a regulatory complaint last fall regarding Binance’s stablecoin reserves, according to a Bloomberg report on Feb. 13.

Circle reported BUSD to NY regulator

Bloomberg’s report says that Circle informed the New York Department of Financial Services (NYDFS) about Binance’s stablecoin, Binance USD (BUSD).

Circle, which monitors blockchain data, reportedly observed discrepancies in Binance’s on-chain stablecoin reserves. Those discrepancies indicated that Binance did not store sufficient crypto to back the full number of stablecoins it had issued.

Circle has not publicly confirmed that it took the above actions. Bloomberg instead attributed its information to an anonymous inside source.

Other companies have also publicized issues around Binance’s BUSD reserve in the past. However, Circle’s alleged decision to report on Binance is significant due to its status as a direct competitor. Whereas Binance provides the Binance USD (BUSD) stablecoin, Circle issues the USD Coin (USDC) stablecoin. In fact, industry-wide rivalry led Binance to partially end support for USDC and other top stablecoins last September.

Circle also is regulated by the NYDFS alongside Paxos — the company that is responsible for issuing BUSD and which was targeted by regulators today.

NYDFS killed BUSD via Paxos

The NYDFS ordered Paxos to halt the production of Binance USD today. Paxos has said that it will comply with those demands by ceasing to issue BUSD and by ending its relationship with Binance as far as the BUSD stablecoin is concerned.

The U.S. Securities and Exchange Commission (SEC) is seemingly preparing to take action on the matter as well, as it has sent a Wells Notice to Paxos. Paxos says that it “categorically disagrees” with the SEC and insists that BUSD is not a security.

Currently, $15.9 billion worth of BUSD are in circulation. Binance CEO Changpeng Zhao said that the exchange would continue to support BUSD while reducing reliance on it. Paxos has said that BUSD will be redeemable through Paxos Trust until 2024.

Paxos will continue to issue its other stablecoin, the Pax Dollar (USDP). That stablecoin remains in circulation with a total supply of $870 million.