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3w ago

Paxos Trust to Pay $48.5 Million in New York DFS Settlement Over Binance-Linked Lapses

The settlement ends a DFS inquiry into Paxos’s oversight failures, imposes new compliance requirements, establishes reporting deadlines, mandates remediation oversight

Binance logo is seen in this illustration taken March 31, 2023. REUTERS/Dado Ruvic/Illustration
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Paxos to pay $48 million in New York settlement over AML compliance failures

Overview

  • On August 7, 2025, Paxos agreed to a $48.5 million settlement with the New York Department of Financial Services to resolve charges of anti-money laundering and due diligence failures tied to its Binance USD stablecoin partnership.
  • The agreement stipulates a $26.5 million civil fine and a $22 million allocation for compliance program upgrades under a DFS-approved remediation plan.
  • A regulator-ordered review found that between July 2017 and November 2022, about $1.6 billion in transactions on Binance’s platform involved illicit actors and went undetected by Paxos.
  • DFS determined that Paxos lacked effective controls to escalate red flags, violated a 2020 AML agreement and failed to enforce adequate transaction monitoring and escalation protocols.
  • Paxos must file a detailed progress report by November 5, 2025, outlining enhancements to customer due diligence, transaction monitoring and governance as part of ongoing DFS oversight.