Paxos Under Investigation by the New York Department of Financial Services
Paxos Trust Company, the stablecoin issuer behind Binance USD (BUSD) and Paxos Dollar (USDP), is reportedly being investigated by the New York Department of Financial Services (NYDFS).
The exact reason for the investigation is unclear at the moment.
BUSD is a U.S. Dollar-collateralized stablecoin that was launched after a partnership with Binance in September 2019.
Paxos Dollar (USDP) was launched in 2018 and is the sixth-largest stablecoin with a market cap of about $875 billion.
The company is also the creator of PAX Gold (PAXG), a gold-backed-Ethereum token.
Paxos is behind the digital asset exchange itBit, launched in 2012.
The NYDFS issued Paxos with “BitLicense” in 2015, allowing the company to conduct digital currency-related activities in the state of New York.
Recent developments
Reports of the investigation are yet to be confirmed. Paxos recently refuted rumors of being ordered to withdraw its application for a full banking charter by the U.S. Office of the Comptroller of the Currency (OCC).
To clarify speculation: Paxos has not been asked to withdraw its application for a national trust bank charter from the OCC, nor has it been denied the charter. Paxos continues to work constructively with the OCC.
— Paxos (@Paxos) February 8, 2023
Paxos claims its BUSD and USDP token reserves are backed wholly in U.S. Dollars and U.S. Treasuries.
READ MORE: ECB on the Risks of Stablecoins and Decentralized Finance (DeFi)
NYDFS’s efforts to protect consumers
The NYDFS declined to comment on ongoing investigations. The department is working to protect consumers from the risks associated with investing in cryptocurrency.
The NYDFS reached a $100 million settlement with Coinbase Global U.S. in January 2022 for failing to oversee about 100,000 suspicious transactions.
In May 2022, the NYDFS published a stablecoin guidance report to ensure stablecoin issuers fully back their assets and attest regularly.
Previous Investigations by NYDFS
The investigation of Paxos wouldn’t be the first one initiated by the NYDFS over the last year.
The image is from Paxos official website.
Andrey Kunev
Reporter at CoinsPress
Andrey Kunev is a knowledgeable cryptocurrency content creator passionate about the crypto market. With extensive experience in market analysis and investment reporting, Andrey is a valuable asset to the CoinsPress team. As a frequent contributor, he offers insightful and comprehensive coverage of market trends, price fluctuations, and new advancements in cryptocurrency. Whether you're a seasoned investor or just getting started, Andrey's clear and concise writing offers a comprehensive look at the current state of the crypto market and its prospects. Stay up-to-date with CoinsPress's expert analysis and commentary on all things cryptocurrency.
