Paxos Trust Company’s administration of Binance’s stablecoin left it open to use by bad actors, the New York Department of Financial Services told Reuters on Monday.
Paxos "violated its obligation to conduct tailored, periodic risk assessments and due diligence refreshes of Binance and Paxos-issued BUSD customers to prevent bad actors from using the platform," a spokesman with the regulator told Reuters, saying the token wasn’t being administered in a “safe and sound” manner.
The state’s financial regulators had previously ordered Paxos to halt its issuance of Binance USD. The NYDFS said it had instructed Paxos to cease minting the stablecoin due to several unresolved issues related to Paxos’ oversight of its relationship with Binance. Paxos said it is ceasing its relationship with Binance for BUSD.
CoinDesk first reported last week that the New York regulator was investigating Paxos.
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