Paxos Settles with NYDFS for $48M Over Binance and AML Violations
Main Idea
Paxos has agreed to pay $48.5 million to the New York Department of Financial Services (NYDFS) due to compliance failures, including inadequate oversight of Binance USD (BUSD) and weak anti-money laundering controls.
Key Points
1. Paxos will pay a $26.5 million fine and invest $22 million in its compliance program as part of the settlement with NYDFS.
2. The NYDFS investigation found Paxos failed to properly oversee Binance USD (BUSD), including lax geofencing that allowed U.S. users to access the stablecoin.
3. Approximately $1.6 billion linked to criminal activity moved through Paxos between 2017 and 2022, highlighting deficiencies in its anti-money laundering (AML) and Know Your Customer (KYC) procedures.
4. Paxos has since rebranded as a compliance-focused blockchain company and resolved the historical issues, which did not impact its other stablecoins, USDP and PYUSD.
Description
Paxos has agreed to pay $48.5 million to the New York Department of Financial Services (NYDFS). This is to resolve allegations related to inadequate due diligence on its former partner, Binance, and failures in its anti-money laundering program. NYDFS Probe Finds Paxos Lacked Oversight According to an August 7 press release, the terms of the settlement require the stablecoin issuer to pay a $26.5 million fine and invest $22 million in its compliance program. Paxos previously issued the Binance U...
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