08.08.2025 00:41

New York's Department of Financial Services (NYDFS) announced a settlement with Paxos Trust Company, a leading stablecoin issuer, resolving charges related to its past collaboration with Binance, the world's largest cryptocurrency exchange. This settlement requires Paxos to pay a $26.5 million penalty.

The NYDFS levied the penalty due to alleged insufficient due diligence on Binance by Paxos, highlighting systemic failures within their anti-money laundering (AML) program. Specifically, the regulator contended that these shortcomings enabled illegal activity by US customers using Binance. This action underscores the NYDFS's commitment to robust regulatory oversight within the cryptocurrency industry.

Further demonstrating its commitment to enhanced compliance, Paxos will also invest an additional $22 million in bolstering its compliance program. This substantial investment underscores the company's dedication to rectifying past deficiencies and fortifying its future AML protocols.

Paxos, in a statement to Decrypt, clarified that the identified compliance issues were historical, dating back over two and a half years, and have since been fully addressed. They emphasized that these issues did not affect customer accounts and caused no consumer harm. The company expressed satisfaction at resolving this matter.

The partnership between Paxos and Binance involved the minting of Binance USD (BUSD), a stablecoin. However, the NYDFS asserted that Paxos's inadequate due diligence on Binance facilitated illegal activities by American users of the exchange. Despite this settlement, Paxos maintains a long-standing record of seeking regulatory oversight and compliance with international standards, a claim supported by their decade-long operational history. The company also emphasized their dedication to ongoing compliance efforts. The settlement concludes a significant chapter in the ongoing regulatory scrutiny of the cryptocurrency industry.