Feb 11, 2023
NYDFS Investigates Paxos Trust Company Over Crypto Risks
The New York Department of Financial Services (NYDFS) is reportedly investigating Paxos Trust Company, the stablecoin issuer behind Binance USD (BUSD) and Paxos Dollar (USDP). An anonymous source familiar with the matter spoke to Bloomberg on Feb. 10, though the exact reason for the investigation is currently unknown.
The NYDFS declined to comment on the investigation, but noted that it is working to protect consumers from risks associated with investing in the crypto market.
Paxos is the creator of two of the world’s most prominent stablecoins. BUSD, a U.S. Dollar-collateralized stablecoin, was launched in partnership with Binance in September 2019. It is now the third largest stablecoin, with a market cap of more than $16 billion. Paxos Dollar (USDP) was launched in 2018 and is now the sixth largest stablecoin, with a market cap of about $875 billion. PAX Gold (PAXG), a gold-backed Ethereum token, is also issued by Paxos.
The NYDFS granted Paxos a “BitLicense” in 2015, which legally permits companies to conduct digital currency-related activities in the state of New York. The firm also operates digital asset exchange itBit, which it launched in 2012 alongside Paxos.
Recent reports suggested that the U.S. Office of the Comptroller of the Currency (OCC) may order Paxos to withdraw its application for its full banking charter, despite the firm receiving preliminary approval in April 2021. However, Paxos has since clarified that this is not the case.
Paxos also attests to its BUSD and USDP token reserves being backed wholly in U.S. Dollars and U.S.Treasuries.
The NYDFS issued Coinbase Global U.S. with a $100 million settlement on Jan. 4 after finding that the company had failed to look over about 100,000 suspicious transactions from customers who opened accounts without sufficient background checks.
In May 2022, following the collapse of Terra LUNA ecosystem and its algorithmic stablecoin TerraClassicUSD (USTC), the NYDFS published a stablecoin guidance report to ensure stablecoin issuers fully back their assets and attest regularly.
Cointelegraph reached out to Paxos and Binance for comment on the matter but did not receive an immediate response.
The web3 space is booming, and the sale of Non-Fungible Tokens (NFTs) has become the latest craze. As the demand for NFTs continues to grow, many companies are looking to capitalize on this trend.
Paxos Trust Company is one such firm that is looking to get in on the action. The New York-based stablecoin issuer, which is behind Binance USD (BUSD) and Paxos Dollar (USDP), has recently been under investigation by the New York Department of Financial Services (NYDFS).
The exact motive behind the investigation is currently unclear, however, the NYDFS has noted that it is working to protect consumers from risks associated with investing in the cryptocurrency market.
Paxos has issued BUSD since their partnership with Binance in September 2019. It is the third largest stablecoin, with a market cap currently exceeding $16 billion. Paxos is also the creator of the Paxos Dollar (USDP), which was launched in 2018 and is now the sixth largest stablecoin, with a market cap of about $875 billion.
The firm is also the founder of PAX Gold (PAXG), a gold-backed-Ethereum token. Paxos also operates digital asset exchange itBit, which it launched in 2012 alongside the founding of Paxos.
The NYDFS granted Paxos a “BitLicense” in 2015, which legally permits companies to conduct digital currency-related activities in the state of New York.
Paxos recently 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. The firm also attests to its BUSD and USDP token reserves being backed wholly in U.S. Dollars and U.S.Treasuries.
To capitalize on the growing demand for NFTs, Paxos has launched a NFT marketing agency that specializes in providing promotion and marketing services for NFTs. The agency offers a variety of services, including Twitter NFT marketing, NFT promotion, and selling NFTs.
The agency is also working to create a comprehensive web3 agency that will provide a full suite of services for web3 projects, such as NFT marketing, NFT promotion, and NFT sales.
The NYDFS issued Coinbase Global U.S. with a $100 million settlement on Jan. 4 after finding that the company had failed to look over about 100,000 suspicious transactions from customers who opened accounts without sufficient background checks.
In May 2022, following the collapse of Terra LUNA ecosystem and its algorithmic stablecoin TerraClassicUSD (USTC), the NYDFS published a stablecoin guidance report to ensure stablecoin issuers fully back their assets and attest regularly.
Cointelegraph reached out to Paxos and Binance for comment on the matter but did not receive an immediate response.
As the demand for NFTs continues to grow, Paxos Trust Company is hoping to capitalize on this trend by launching a NFT marketing agency that specializes in providing promotion and marketing services for NFTs. The agency is also working to create a comprehensive web3 agency that will provide a full suite of services for web3 projects, such as NFT marketing, NFT promotion, and NFT sales.
The NYDFS has recently been investigating Paxos Trust Company to ensure that the firm is properly protecting consumers from risks associated with investing in the crypto market. The firm has 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 is the creator of two of the world’s most prominent stablecoins, BUSD and USDP, and the founder of PAX Gold (
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