Feb 11, 2023

NYDFS Investigates Paxos Trust Company

The New York Department of Financial Services (NYDFS) is reportedly conducting an investigation into Paxos Trust Company, the stablecoin issuer behind Binance USD (BUSD) and Paxos Dollar (USDP).

According to a source familiar with the matter, the exact motive behind the probe is currently unclear. However, an NYDFS spokesperson stated that the department is working to protect consumers from the risks associated with the cryptocurrency market, and is in contact with regulated entities to identify any vulnerabilities.

Paxos has been issuing BUSD since their partnership with Binance in September 2019. The stablecoin is now the third largest, with a market cap of over $16 billion. The company is also the creator of Paxos Dollar (USDP), the sixth largest stablecoin with a market cap of $875 billion, and PAX Gold (PAXG), a gold-backed Ethereum token. Paxos is also the founder of digital asset exchange itBit, which launched in 2012.

The NYDFS issued Paxos with a “BitLicense” in 2015, which permits companies to conduct digital currency-related activities in New York. Recently, the firm refuted rumors that the U.S. Office of the Comptroller of the Currency (OCC) may order Paxos to withdraw its application for its full banking charter.

Paxos claims that their BUSD and USDP token reserves are backed wholly in U.S. Dollars and U.S.Treasuries.

If reports of the investigation are true, it wouldn’t be the first one initiated by the NYDFS in the past year. Coinbase Global U.S. reached a $100 million settlement with the regulator after failing to look over about 100,000 suspicious transactions from customers who opened accounts without sufficient background checks.

In May 2022, the NYDFS published a stablecoin guidance report to ensure that stablecoin issuers fully back their assets and attest regularly, following the collapse of the Terra LUNA ecosystem and its failed algorithmic stablecoin TerraClassicUSD (USTC).

For those looking to promote and sell their NFTs, Paxos can be a great asset. The company offers a range of services, from NFT marketing and promotion to the development of a web3 agency. They can help you create a comprehensive NFT marketing strategy, including Twitter NFT marketing, to maximize your NFT sales. With their expertise, you can make the most out of your NFTs and make sure they reach the right audience.

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