Paxos under investigation by US authorities: report

Paxos has been trying to secure a national credit bank charter for some time now. There were rumors that the company had been denied the aforementioned license, which it actually denied.

However, it appears that trouble may be on the way for the New York-based cryptocurrency company.

The investigation began

As a cryptocurrency company headquartered in New York, Paxos Trust Co. Regulated by the New York State Department of Financial Services (NYSDFS), The Watchdog provides local businesses with a BitLicence, which is mandatory for companies wishing to operate in their jurisdiction.

All stablecoin-related operations must fully comply with the guidelines for the NYSDFS stablecoin — issued in the wake of the scandalous crash of TerraUSD — along with all other regulatory directives. In return, the New York watchdog also gets regulatory insights into these companies’ dealings.

Recently, the NYSDFS launched an investigation into Paxo’s dealings, though the exact scope of the investigation is unclear, according to Bloomberg.

A Paxos spokesperson declined to comment on the investigation itself, saying it was still ongoing. However, they have confirmed that they are in constant contact with the regulators, regardless of the ongoing investigations.

“The department is in constant contact with regulated entities to understand the vulnerabilities and risks to consumers and the institutions themselves from the volatility in the cryptocurrency market that we are witnessing.”

The reason for the scan is uncertain

It should be noted that while Paxos may be best known for backing the Binance stablecoin, it also owns a USD-backed stablecoin, as well as a gold-backed cryptocurrency and crypto exchange, itBit. Therefore, the current investigation may not be entirely related to BUSD or even to stablecoins in general.

When reached for comment, Binance confirmed that BUSD is one of the most transparent stablecoins out there, and is fully backed.

“BUSD is a 1-to-1 backed stablecoin and is one of the most transparent stablecoins out there.”

Binance also stated that it will continue to monitor the situation involving Paxos and will clarify the circumstances as necessary.

However, both Binance and Paxos have remained silent on the subject of the investigation and will likely continue to do so unless absolutely necessary.

It is also important to note that an investigation does not mean that an error actually occurred. Indeed, if the investigation shows that no harm occurred, it can be taken as evidence of the company’s strict compliance with the rules.

Paxos Post Under Investigation by US Authorities: The report appeared first on CryptoPotato.

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