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PayPal has reported that it has received a subpoena from the US Securities and Exchange Commission’s division of enforcement related to its stablecoin linked to the US dollar.
PayPal receives SEC subpoena
The subpoena demands PayPal to produce documents tied to the project, according to a regulatory filing. The company is cooperating with the probe, the filing said.
The firm entered the market with PayPal USD (PYUSD), in August, PYUSD is an Ethereum-based token offered to online-payments customers before expanding to the company’s Venmo app.
PayPal’s stablecoin was the first from a major financial service firm.
The announcement raised concerns in Washington because it was a reminder of the Libra stablecoin, a previous effort by Facebook, now Meta, that created much consternation but ultimately failed.
The fear from some US regulators is that a token tied to a major tech platform could expand quickly to wide usage and present a threat to US financial stability.
“On November 1, 2023, we received a subpoena from the U.S. SEC Division of Enforcement relating to PayPal USD stablecoin,” PayPal revealed in its quarterly earnings report.
“The subpoena requests the production of documents. We are cooperating with the SEC in connection with this request.”
Perversely, the announcement of the subpoena during the earnings call added nearly $4 billion to its market value after a pledge to turn “leaner” fired up investors.
The company’s shares closed nearly 7% higher at $55.06 on Thursday as a strong full-year profit forecast also calmed market jitters about a spending slowdown.
“Simply put, our cost base remains too high,” the company’s new CEO, Alex Chriss said, adding that PayPal would align its resources to its “most profitable growth priorities.”
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