Paxos Settles with NYDFS for $48.5 million Amid Binance Scrutiny

- Paxos finalizes $48.5 million settlement with NYDFS. - Agreement addresses AML deficiencies and Binance partnership concerns. On August 7, 2025, Paxos Trust Company reached a $48.5 million settlement with the New York Department of Financial Services (NYDFS). The agreement resolves regulatory issues stemming from shortcomings in the company’s anti-money laundering (AML) protocols and addresses concerns over its partnership with cryptocurrency exchange Binance. According to reports from Cointelegraph and Bloomberg on August 7, the settlement’s terms require Paxos to pay a $26.5 million penalty to New York and allocate $22 million to upgrade its compliance systems. The NYDFS flagged significant gaps in Paxos’s transaction monitoring procedures and criticized the company for insufficient due diligence in its business relationship with Binance. Regulators found that Paxos failed to adequately track suspicious activities involving Binance, which allowed the movement of approximately $1.6 billion in illicit funds through the exchange between 2017 and 2022. As a result, the NYDFS concluded that Paxos’s AML program had systemic deficiencies and did not meet required compliance standards. This settlement follows other regulatory challenges for Paxos. In February 2023, the NYDFS ordered the company to stop issuing the Binance USD (BUSD) stablecoin, while the U.S. Securities and Exchange Commission (SEC) also issued a Wells Notice to Paxos, alleging that BUSD was an unregistered security.