According to an announcement of compliance and Global System, according to an announcement of 26.5 million dollars based in New York, of 26.5 million dollars for the “systemic failures” of New York, in its programs of compliance and fight against money laundering, including a previous partnership with Global Crypto Exchange Binance, according to an announcement on Thursday.
In addition to the fine, Paxos has agreed to spend an additional $ 22 million to improve its compliance program to bring it to SNUFF with the New York Financial Services Department ‘ (Nydfs) Standards.
“The Ministry of Financial Services has led the country to regulate the virtual currency industry, to protect consumers and markets by exams, supervision and, if necessary, the application,” said NYDFS Superintendent Adrienne Harris, in a press release. “Regulated entities must maintain the appropriate risk management executives that correspond to their commercial risks, which includes relations with business partners and third -party suppliers. The ministry continues to take important measures to ensure responsibility, in turn protecting consumers and protecting the integrity of the financial system. ”
The failures of the compliance identified by the NYDF have been largely linked to the single PAXOS partnership with Binance, the largest exchange of cryptography in the world. The two companies joined forces in 2019 to issue Binance de Binance Stablecoin, Busd. The relationship with Binance finally landed Paxos in hot water: in 2023, the NYDFS launched an investigation into the Busd show by Paxos, the Securities and Exchange American Commission (SECOND) sent PAXOS a well opinion informing the company of its intention to continue (a year later, the SEC decided to remove its application measures) and Paxos finally decided to stop Busd completely to the Order of Nydfs.
The fine announced Thursday is linked to the original NYDFS survey. According to Nydfs press release, the investigation revealed that Paxos had no appropriate controls in place to effectively monitor the illegal activity occurring by Binance. And when the illicit activity has been identified, said the regulator, the company “has failed to degenerate the red flags” to the high-ups and the members of the board of directors of Paxos.
In addition to compliance problems related to binance, the NYDFS said that its PAXOS survey had revealed other shortcomings in its compliance program, including an “non -sophisticated”, knowing your customer (KYc) Program that has enabled illicit players to open several accounts and remain unteashed, and a system for monitoring “deficient” transactions which prevented Paxos from “detecting obvious models of money laundering”.
A PAXOS representative described the compliance failures identified by the NYDFS as “historical problems that were identified more than two and a half years ago and have since been fully corrected”. The problems added the representative: “had no impact on customer accounts and there was no harm to consumers.”
“It marks the resolution of this question and we are happy to put it behind,” said the representative. “There are no new claims concerning the paxos relationship with binance or Busd publication, and the other stable marked paxos work on similar models with different partners and have faced any regulatory problems.”
