Paxos Pays $48.5 Million to Resolve NYDFS Probe Over Binance Ties

Paxos Trust Company has agreed to a $48.5 million settlement with the New York State Department of Financial Services after the regulator found the blockchain firm failed to conduct adequate due diligence on its former partner, cryptocurrency exchange Binance, and maintained weak anti-money-laundering controls. Under the agreement, Paxos will pay a $26.5 million civil penalty and invest a further $22 million to bolster compliance programs. NYDFS Superintendent Adrienne A. Harris said the action underscores that licensed digital-asset firms must tailor risk-management frameworks to their business partners and customers. The deficiencies relate to Paxos’s previous role in issuing Binance USD (BUSD), a dollar-pegged stablecoin it jointly launched with Binance. Paxos ended its relationship with the exchange in 2023, and BUSD is no longer offered. Paxos said the issues were historical, had been remediated, and did not affect customer funds.