Paxos, a fintech firm known for minting stablecoins, has agreed to pay a $26.5 million fine to New York State in response to charges regarding its former partnership with Binance, the largest cryptocurrency exchange globally. The New York Department of Financial Services (NYDFS) stated that Paxos did not conduct adequate due diligence on Binance, leading to shortcomings in its anti-money laundering measures. Additionally, Paxos plans to invest $22 million to enhance its compliance program. The NYDFS emphasized the necessity for regulated entities to maintain robust risk management frameworks, particularly concerning affiliations with significant business partners. Despite historical compliance issues, Paxos affirmed that there has been no impact on customer accounts and that the existing tokens remain fully backed and redeemable. The settlement aims to close the regulatory chapter tied to their previous collaboration on the Binance USD (BUSD) stablecoin, which has since ceased operations as of 2023.

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