Paxos Settles with NYDFS for $48M Over Binance and AML Violations

Paxos agreed to pay $ 48.5 million to the New York Financial Services (NYDFS).

This is the solution to allegations related to insufficient care for its former partner, Binance, and failures in the anti -money laundering program.

He finds NYDFS PAXOS probe lacking censorship

According to a reporter of August 7, the terms of settlement It requires Stablecoin source to pay a fine of $ 26.5 million and invest $ 22 million in its compliance program. Paxos previously released Stablecoin USD Bank (BusD) until 2023, when NYDFS I command It is to stop the weak geographical controls of the stock exchange and penalties. According to the regulatory, the procedure was the “first organization from Stablecoin”.

The supervisor said Adrian A.

Paxos, which was licensed in 2015 as a limited -purpose confidence company, was licensed to work in the virtual currency field. Later I entered Partnership with Binance to version, marketing and distribution Busd.

As part of its regulatory obligations, the company was required to conduct regular due care on Binance. However, the New York Financial Supervision Authority has found that it has no appropriate controls to monitor or through the stock exchange that occurs on or through the stock exchange. It also failed to escalate the red flags to its higher administration and the board of directors.

One of the main problems was “Lax Geofencing”, which allowed users in the United States to reach its unlicensed exchange. A review of historical transactions between 2017 and 2022, with a focus on the chosen digital assets, revealed that approximately $ 1.6 billion, through which it was linked to criminal activity. The investigation also found that the platform had addressed payments that include entities that have already been punished by the US Foreign Assets Office (OFAC).

Compliance issues

Besides the shortcomings with Binance, the New York organizer also found that Paxos was running a weak program to comply for years. The KyC’s procedures (KYC) has been described as “non -advanced”, allowing users who have shared addresses, interrelated documents, suspicious behavior opening multiple accounts without discovery.

The weak transaction monitoring system also failed to capture clear signs of money laundering. The authorities have noted that the company has no clear rules for launching investigations after receiving law enforcement requests, which led to a delay in the discovery of illegal activity on the platform.

Paxos has since moved to the renamination of the compliance infrastructure. The company stated that the specific problems were historical, completely solved, and did not affect customer accounts. Continuing Work Other organized stablecoins, including PAX dollar (USDP) and Paypal usd (Pyusd).