Paxos will pay for USD $ 26.5 million to the NYDFS for problems with the Stablecoin Busd

The New York financial regulator sanctioned Paxos for deficiencies in its anti -ilavado program and its lack of diligence when associated with Binance for the issuance of a stablecoin.

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• NYDFS imposed a fine of USD $ 26.5 million to Paxos
  
• The company will also allocate USD $ 22 million to reinforce compliance.
  
• The case is linked to the emission of the stablecoin BUSD in collaboration with Binance

The Stablecoins issuing financial company, Paxos Trust Company, agreed to pay a fine of USD $ 26.5 million to New York State Financial Services Department (NYDFS)as a result of an investigation into their association with Binance In the broadcast of the stablecoin USD Binance (BUSD). The sanction responds to deficiencies in due diligence by the company, as well as weaknesses in your program against money laundering.

This was indicated by the NYDFS In a statement reviewed by various media, where they pointed out that in addition to the payment of the fine, Paxos He promised to invest other USD $ 22 million in the improvement of their regulatory compliance systems.

The agency’s superintendent, Adrienne Harris, emphasized that regulated entities must have adequate risk management frameworks that fit their business models. This includes the proper evaluation of commercial partners and external suppliers.

“The department continues to take significant measures to guarantee accountability, protect consumers and safeguard the integrity of the financial system,” Harris declared.

Deficiencies in collaboration with Binance

Paxos and Binance They signed an agreement to launch in 2018 BUSD, A stablecoin backed one by one with US dollars. The company acted as custodian and issuer of the asset, while the Exchange offered the currency within its platform.

According to the consent document published by the Nydfs, Paxos requested to Binance Guarantees on the implementation of geolocation mechanisms to prevent US users from accessing their platform without regulation. In response, the then compliance director of the Exchange assured that the restrictive policies were already in operation and that Binance.com It was completely blocked for US residents.

However, the New York regulator said Paxos He accepted these guarantees without making an independent verification.

“The compliance problems discussed are historical, they were identified more than two and a half years ago and have been totally corrected,” Paxos indicated in a statement. “They did not affect customer accounts or cause damage to consumers.”

In 2023, the NYDFS ordered to Paxos suspend the issuance of BUSD, citing concerns about their relationship with Binance That same year, the company announced plans to finish its collaboration with the platform.

Broader regulatory panorama

The agreement with the New York State Regulator is not the only legal front that has faced Paxos In 2021, the US Stock Exchange and Securities Commission (SEC) investigated yes BUSD It could be considered an unregistered value. However, this investigation was ruled out in 2024, although this process was the one that resulted in the collapse of the stablecoin.

Meanwhile, Binance He faced multiple accusations of regulatory breach. In November 2023, his former executive director, Changpeng Zhao, declared himself guilty to him Department of Justice and agreed to pay USD $ 4 billion to resolve charges related to violations of sanctions and money laundering laws.

The Sec also filed a lawsuit against Binance and Zhao for operating an exchange without registration, although that case was subsequently dismissed.

Lessons for crypto industry

The case of Paxos with the NYDFS It evidences the growing pressure of regulators on companies in the crypto sector, especially when it comes to stablcoins and financial compliance.

Although Paxos He maintains that his failures were corrected and did not generate damage to users, the regulator’s message is clear: trade associations must undergo rigorous reviews, and it is not enough to trust the word of the partner.

The resolution of this case could serve as an example for other ecosystem companies operating under increasingly strict compliance frames in jurisdictions such as New York.

Article written by a content editor. Edited by Angel Di Matteo / Diariobitcoin

Original image of UNSPLASH.

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