Paxos fined $26.5 million and required to invest in compliance remediation

According to news from HashKey, the New York Department of Financial Services (DFS) announced on its official website that Paxos was 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. An investigation found that Paxos did not effectively monitor suspicious transactions involving Binance, resulting in approximately $1.6 billion of funds related to illegal activities flowing in and out of Binance between 2017 and 2022. Additionally, Paxos's customer due diligence and transaction monitoring procedures had long been inadequate, failing to timely identify and address high-risk accounts and behaviors.