Paxos faces a $26.5 million fine from NYDFS over compliance failures related to Binance and BUSD, highlighting the regulatory scrutiny of stablecoins.
Yo, what's the deal with Paxos, the NYDFS, and the BUSD stablecoin? It's a real New York story of ambition, regulation, and a few bumps along the way. Paxos, once a golden child in the crypto world, has hit a snag with the New York Department of Financial Services (NYDFS) over its past dealings with Binance and its BUSD stablecoin. Let's break it down.
The NYDFS Drops the Hammer
The NYDFS has slapped Paxos with a $26.5 million fine for what it calls “systemic failures” in its compliance and anti-money laundering (AML) programs. That's a lotta bagels! This all stems from Paxos's partnership with Binance to issue the BUSD stablecoin, which, as it turns out, wasn't all sunshine and rainbows.
According to the NYDFS, Paxos didn't have the right controls in place to monitor illicit activity on Binance. We're talkin' about $1.6 billion in dirty transactions, though not all of it involved stablecoins. Plus, when red flags popped up, Paxos apparently didn't escalate them properly. Not a good look.
Paxos Responds: 'It Was a Long Time Ago!'
Paxos is like,
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