Paxos reaches a $48.5 million settlement agreement with New York financial regulators

ChainCatcher news, according to an announcement on the official website of the New York Department of Financial Services (DFS), Paxos has been fined $26.5 million for failing to conduct adequate due diligence on its former partner Binance and for significant deficiencies in its anti-money laundering compliance system. Additionally, it is required to invest an extra $22 million to rectify its compliance system.

The investigation found that Paxos did not effectively monitor suspicious transactions involving Binance, resulting in approximately $1.6 billion in funds related to illegal activities flowing in and out of Binance between 2017 and 2022.

Furthermore, Paxos's customer due diligence and transaction monitoring procedures have long been inadequate, failing to timely identify and address high-risk accounts and behaviors.