The New York Department of Financial Services (NYDFS) has fined Paxos $48.5 million for “serious deficiencies” in its anti-money laundering practices and inadequate monitoring of over $1.6 billion in transactions linked to Binance. Paxos had previously issued the BUSD stablecoin, which was once among the top three in global circulation.
According to the settlement agreement, Paxos will pay a $26.5 million penalty and invest an additional $22 million to strengthen its internal compliance systems. The BUSD token was banned in February 2023 — a move that triggered a wave of investigations into Binance, eventually leading to a record $4.3 billion fine and the resignation of its CEO Changpeng Zhao.
Paxos no longer works with Binance and now issues a new stablecoin — PYUSD — under a partnership with PayPal. The BUSD case remains a landmark event in the tightening of crypto regulation in the U.S., underscoring growing government scrutiny over stablecoins and infrastructure providers.
