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New York State’s Department of Financial Services, or NYDFS, reportedly received a complaint from stablecoin issuer Circle regarding Binance’s reserves prior to its crackdown on BUSD.

According to a Feb. 13 Bloomberg report, Circle alerted NYDFS in an autumn 2022 complaint that Binance’s reserves were insufficient to support its tokens, seemingly including stablecoin Binance USD (BUSD). A person familiar with the matter reportedly said Circle’s team had uncovered the information through blockchain data.

Circle’s actions came prior to the United States Securities and Exchange Commission’s plans to file a lawsuit against Paxos, claiming that BUSD was an unregistered security. NYDFS announced its own regulatory action on Feb. 13, ordering Paxos “cease minting Paxos-issued BUSD” and reiterating its requirements for tokens under its regime to be fully backed by cash or cash equivalents.

In a Feb. 13 statement responding to the SEC lawsuit, Paxos said BUSD was “not a security under the federal securities laws”, adding:

“BUSD issued by Paxos is always backed 1:1 with US dollar-denominated reserves, fully segregated and held in bankruptcy remote accounts. We will engage with the SEC staff on this issue and are prepared to vigorously litigate if necessary.”

Related: New York financial regulator investigates Gemini over FDIC claims: Report

The crypto regulatory action was the latest in the United States affecting crypto firms as the SEC reached an agreement with Kraken to stop its staking services for U.S. users. The financial regulator also continues to engage with Ripple in a lawsuit over XRP, claiming that the tokens were securities under its purview.