The New York State Department of Financial Services entered a consent order with Paxos Trust Company, LLC on 7 August 2025, requiring the digital asset firm to pay a civil monetary penalty of $26.5 million for systemic failures in its anti-money laundering compliance programme. The order was published on the NYDFS website.
NYDFS found that Paxos failed to conduct sufficient due diligence on its former business partner Binance. The regulator also determined that Paxos's transaction monitoring system was deficient, including a failure to regularly assess and tune its surveillance rules to account for high-risk areas of the business. The settlement also requires Paxos to invest in improving its compliance programme.
COMPLIANCE INVESTMENT
Under the terms of the settlement, Paxos is also required to invest $22 million in its compliance programme, bringing the total settlement to $48.5 million.
BACKGROUND
Paxos was the first company to receive a NYDFS Limited Purpose Trust Charter for Digital Assets, a licence granted in 2015 that allowed it to operate stablecoin issuance, asset tokenisation, settlement services, and cryptocurrency brokerage under New York's regulatory framework.