Charles Cascarilla, Paxos CEO, made the announcement on Tuesday, citing the partnership as a divergence from its "strategic priorities."
“The market has evolved and the Binance relationship no longer aligns with our current strategic priorities,” Cascarilla said in an internal email.
Cascarilla claimed the decision was unrelated to pressure from the New York Department of Financial Services (NYDFS) and the SEC, which have recently pried into Paxos's relationship with the exchange.
Last week, Paxos was ordered to stop issuing BUSD due to "unresolved issues."
The news comes just days after the SEC stated it was planning to sue Paxos for violating investor protection laws. The SEC's enforcement staff issued a Wells notice to Paxos, which the financial watchdog uses to inform companies and individuals of possible enforcement action.
Whilst Paxos claims the termination of their relationship is unrelated to the SEC probe, it did inform employees that it is in "constructive discussions" with the government body.
"We look forward to continuing that dialogue in private. Of course, if necessary, we will defend our position in litigation," Cascarilla said in an email to employees.
Paxos said last week that it "categorically disagrees" with the SEC calling BUSD a security. Generally if the expected profit comes from a third party business, the investment is considered a security.
Read more: Staking, Securities & Enforcement
"We remain fully focused on serving the end holders of BUSD and protecting them from undo harm. Paxos will continue to support BUSD through at least February 2024 and maintain the highest standards of security and soundness in the stablecoin market," Cascarilla said.