Overview

• A DFS review found Paxos lacked sufficient anti-money laundering controls to monitor about $1.6 billion in illicit flows on Binance between 2017 and 2022.
• New York regulators ordered Paxos to cease BUSD issuance in February 2023 after uncovering systemic AML and due diligence failures in its Binance partnership.
• Under the consent order, Paxos must pay a $26.5 million fine and invest $22 million to enhance its AML, know-your-customer and transaction-monitoring systems.
• Paxos has asserted that all historical compliance deficiencies have been fully remediated and that no customer accounts were affected by past lapses.
• The settlement highlights New York’s rigorous approach to stablecoin oversight as federal crypto enforcement priorities evolve.