Paxos has reached a settlement with New York authorities, agreeing to pay $48.5 million due to its partnership with Binance.
Settlement with Regulators
On August 7, Paxos settled with the New York Department of Financial Services for $48.5 million. As part of the settlement, Paxos will pay a $26.5 million fine and allocate an additional $22 million to enhance its compliance program.
Issues with Binance and BUSD
The partnership between Paxos and Binance began in 2020, leading to the issuance of the BUSD token, which peaked as the third-largest stablecoin over $23 billion. However, scrutiny intensified in late 2022, leading to investigations by both the NYDFS and the SEC, which accused Binance of anti-money laundering violations and classified BUSD as an unregistered security.
Regulatory Changes in the U.S.
The settlement coincides with a shift in the regulatory stance towards cryptocurrencies in the U.S. Following the appointment of a pro-crypto chairman, Paul Atkins, the SEC concluded its investigation into Paxos in July 2024.
The agreement highlights the necessity for regulatory compliance in the crypto sector as the market adapts to new standards.
