Paxos Trust Company has resolved a significant regulatory dispute, agreeing to a $48.5 million settlement with the New York Department of Financial Services (NYDFS) stemming from compliance failures related to its partnership with Binance and the Binance USD (BUSD) stablecoin.
The settlement comprises a $26.5 million civil monetary penalty paid to the NYDFS. Additionally, Paxos will invest $22 million into bolstering its compliance frameworks and systems to meet regulatory expectations for its stablecoin activities.
The resolution follows the July conclusion of a related investigation by the U.S. Securities and Exchange Commission (SEC). That probe closed without further enforcement action, allowing Paxos to move forward.
This case is viewed as a prominent example of heightened regulatory scrutiny targeting stablecoin issuers and their operational partnerships within the rapidly evolving cryptocurrency industry, emphasizing the critical importance of robust compliance controls.