Paxos Trust has agreed to pay $48.5 million after New York regulators said the company failed to stop illegal activity connected to the cryptocurrency platform Binance. The case brings fresh attention to how digital currency firms are being watched more closely by state authorities. New York Says Paxos Missed Red Flags In a major development, New York’s Department of Financial Services said Paxos Trust did not do enough to keep illegal transactions off its platform while working with Binance. The company once helped issue Binance USD, a digital coin tied to the value of the U.S. dollar. Regulators said Paxos did not have proper systems in place to spot suspicious transactions. They also said the company failed to report issues to top management. As a result, about $1.6 billion in transactions flowed through Binance between 2017 and 2022, involving scams, people on sanctions lists, and users of darknet websites. Some of the deals included people already flagged by U.S. officials. The state ordered Paxos to look into the issue in more detail. After a review, the company was told to stop offering Binance’s coin in early 2023. The business relationship between Paxos and Binance was later ended. Paxos Trust to Spend Millions on Fixing Compliance Gaps As part of the settlement, Paxos Trust will pay $26.5 million as a fine. The company will also spend $22 million to fix and improve its compliance systems. New York officials said the problems at Paxos were serious and pointed to a larger lack of proper controls inside the company. Paxos said no customer accounts were affected and that it has fixed the problems raised by the state. The company also said users were not harmed during the time of the reported failures. In related news, the United States Department of Justice (DOJ) is considering a retrial for Tornado Cash developer Roman Storm after a partial verdict left two major charges unresolved. Binance Avoids Charges in This Case But Faces Other Legal Trouble Binance was not charged in the New York case, but it is still under legal pressure. In late 2023, Binance admitted to breaking federal rules and agreed to pay a fine of over $4 billion. This included violations of anti-money laundering and sanctions laws. In April 2025, the Securities Commission paused a separate case against Binance. Still, the Paxos Trust settlement shows that New York is taking steps to hold crypto companies accountable. The post Paxos Trust Pays $48.5M to Settle Binance-Linked New York Case appeared first on TheCoinrise.com .
