Paxos Settles NYDFS Compliance Case with $48.5 million Penalty

- Paxos reaches a $48.5 million settlement with NYDFS over BUSD compliance. - The agreement addresses due diligence and AML lapses in its Binance partnership. On August 7, 2025, Cointelegraph reported that Paxos Trust Company settled with the NYDFS for $48.5 million, following an investigation into compliance failures linked to the issuance of the Binance USD (BUSD) stablecoin. As part of the settlement, Paxos will pay $26.5 million in penalties and allocate $22 million to enhance its compliance infrastructure. The NYDFS investigation found that Paxos’s failure to sufficiently monitor Binance allowed $1.6 billion in illicit transactions to flow through the exchange from past activities. In addition, NYDFS Superintendent Adrienne A. Harris underscored the critical importance of robust risk management systems, emphasizing that compliant institutions in regulated spaces must also maintain vigilant oversight of their business partners. In response, Paxos clarified that its compliance shortcomings, which occurred over two and a half years ago, have since been fully addressed. The company added that the issues did not affect any customer accounts or funds during this period.