New York Regulator Secures $48.5M Settlement From Paxos Over Binance Dealings
Main Idea
Paxos Trust Company has agreed to a $48.5 million settlement with the New York State Department of Financial Services (NYDFS) over failures in anti-money laundering (AML) compliance and monitoring its relationship with Binance.
Key Points
1. Paxos was fined $26.5 million and must spend $22 million to improve its compliance systems due to deficiencies in monitoring Binance-related transactions.
2. NYDFS found $1.6 billion in suspicious transactions linked to Binance from 2017 to 2022, which Paxos failed to report.
3. Paxos had inadequate transaction monitoring tools and unclear rules for addressing suspicious activity, allowing bad actors to evade detection.
4. In 2023, NYDFS ordered Paxos to stop minting Binance USD (BUSD), leading to the stablecoin's wind-down.
5. Paxos defended its compliance record, stating BUSD was a regulated product and that it successfully wound down $16 billion in BUSD without disruption.
Description
Paxos Trust Company has agreed to a $48.5 million settlement with the New York State Department of Financial Services (NYDFS) over allegations it failed to monitor illicit activity linked to its former partner, cryptocurrency exchange Binance. NEW: DFS has secured a $48.5 Million settlement with Paxos Trust Company for anti-money laundering deficiencies and diligence failures. DFS remains committed to ensuring a fair and equitable financial system for all New Yorkers. See the full release: https...
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