SEC subpoenas PayPal over stablecoin

The Securities and Exchange Commission (SEC) has subpoenaed PayPal over its dollar-backed stablecoin, the company revealed in a regulatory filing Thursday.

PayPal said it received the subpoena, which asked the company to produce documents related to its stablecoin, Wednesday and is “cooperating with the SEC.”

The financial technology firm launched the stablecoin backed by “U.S. dollar deposits, short-term U.S. treasuries and similar cash equivalents” in early August. 

Stablecoins are a type of cryptocurrency tied to a stable asset. They are meant to serve as a less volatile alternative to other cryptocurrencies.

However, like other cryptocurrencies, stablecoins have faced scrutiny from U.S. regulators, particularly in the wake of TerraUSD’s collapse last May. 

The SEC charged Terraform Labs, the startup behind the algorithmic stablecoin tied to the U.S. dollar, and its co-founder Do Hyeong Kwon with securities fraud in February. 

In another blow for the crypto industry, FTX founder Sam Bankman-Fried was convicted Thursday on seven counts, including wire fraud and conspiracy to commit securities fraud, over his management of the now defunct crypto exchange.

The 31-year-old was accused of defrauding his customers and investors of billions of dollars in a scheme that prosecutors described as “one of the biggest financial frauds in American history.”