New York Regulator Secures $48.5M Settlement From Paxos Over Binance Dealings

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.