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In regulators The New York State Department of Financial Services and stablecoin issuer Paxos have agreed to a $48.5 million settlement after the regulator accused Paxos of insufficient anti-money laundering controls and due diligence failures in its former partnership with Binance to issue the BUSD stablecoin. The NYDFS alleged that Paxos didn’t have a sufficient monitoring program to detect “significant illicit activity occurring at or through Binance”, including transactions from US customers accessing the exchange despite prohibitions, and transactions with sanctioned entities. The NYDFS also claimed that, outside of the Binance partnership, Paxos’ insufficient compliance programs allowed customers to open multiple accounts and engage in potentially illicit coordinated activity, failed to detect “obvious patterns of money laundering”, and poorly defined when to open investigations based on law enforcement requests. $26.5 million of the settlement is a penalty paid to the state, and the remaining $22 million will go to compliance improvements.12
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In regulators The New York State Department of Financial Services and stablecoin issuer Paxos have agreed to a $48.5 million settlement after the regulator accused Paxos of insufficient anti-money laundering controls and due diligence failures in its former partnership with Binance to issue the BUSD stablecoin. The NYDFS alleged that Paxos didn’t have a sufficient monitoring program to detect “significant illicit activity occurring at or through Binance”, including transactions from US customers accessing the exchange despite prohibitions, and transactions with sanctioned entities. The NYDFS also claimed that, outside of the Binance partnership, Paxos’ insufficient compliance programs allowed customers to open multiple accounts and engage in potentially illicit coordinated activity, failed to detect “obvious patterns of money laundering”, and poorly defined when to open investigations based on law enforcement requests. $26.5 million of the settlement is a penalty paid to the state, and the remaining $22 million will go to compliance improvements.12
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