Paxos has agreed to pay $48.5 million to settle with New York’s financial regulator over issues linked to its partnership with Binance
$12.11B
and weaknesses in how it handled anti-money laundering checks.
The New York Department of Financial Services (NYDFS) announced the deal on August 7.
As part of the agreement, Paxos will pay a $26.5 million fine and spend another $22 million to improve its internal compliance systems.
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The regulator found that Paxos failed to properly review its relationship with Binance and allowed around $1.6 billion to move through its Binance USD (BUSD) stablecoin in suspicious transactions.
NYDFS Superintendent Adrienne A. Harris stated:
Regulated entities must maintain appropriate risk management frameworks that correspond to their business risks, which include relationships with business partners and third-party vendors.
In February 2023, NYDFS ordered Paxos to stop issuing BUSD. The US Securities and Exchange Commission (SEC) also sent a Wells Notice to Paxos.
The letter claimed that the company had broken securities laws by offering an unregistered asset through its partnership with Binance. However, the SEC dropped the notice in 2024 and did not follow through with charges.
Still, NYDFS claimed that Paxos failed to meet know your customer (KYC) requirements, which are meant to ensure that businesses understand who they are dealing with.
Recently, the SEC reached a settlement with Huynh Tran Quang Duy, the founder of MyConstant. What does the agreement include? Read the full story.
