![](\"https:\/\/images.cointelegraph.com\/images\/840_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjMtMDIvZjdmNTY2ODQtNzdjNS00MzUxLTljMDMtY2FiNWU1OGVhMjE4LmpwZw==.jpg\")
<\/p>\n<\/p>\n
Paxos Trust Company \u2014 the New York-based stablecoin issuer behind Binance USD (BUSD)<\/a>\u00a0and Paxos Dollar (USDP<\/a>) \u2014 is reportedly being investigated by the New York Department of Financial Services (NYDFS). <\/p>\n A \u201cperson familiar with the matter\u201d told Bloomberg in a Feb. 10 report that the exact motive behind the probe is currently unclear.<\/p>\n An NYDFS spokesperson declined to comment on ongoing investigations but noted that the department is broadly working to protect consumers from risks associated with investing in the cryptocurrency market:<\/p>\n \u201cThe department is in continuous contact with regulated entities to understand vulnerabilities and risks to consumers and the institutions themselves from crypto market volatility we are experiencing.\u201d<\/p><\/blockquote>\n Paxos has issued BUSD<\/a> \u2014 a U.S. Dollar-collateralized stablecoin \u2014 since the firm struck a partnership with Binance in September 2019. It is the third largest stablecoin, with a market cap currently exceeding $16 billion.<\/p>\n It is also the creator of the Paxos Dollar (USDP) which was launched in 2018. Today it is the sixth largest stablecoin with a market cap of about $875 billion, according<\/a> to CoinGecko, and is the founder of PAX Gold (PAXG), a gold-backed-Ethereum token.<\/p>\n The company is also behind digital asset exchange itBit, which it launched in 2012 alongside the founding of Paxos.<\/p>\n The NYDFS issued Paxos with \u201cBitLicense\u201d in 2015, which legally permits companies to conduct digital currency-related activities in the state of New York.<\/p>\n Paxos recently refuted rumors<\/a> that the U.S. Office of the Comptroller of the Currency (OCC) may order Paxos to withdraw its application for its full banking charter, despite the firm only receiving a preliminary approval in April, 2021.<\/a><\/p>\n To clarify speculation: Paxos has not been asked to withdraw its application for a national trust bank charter from the OCC, nor has it been denied the charter. Paxos continues to work constructively with the OCC.<\/p>\n \u2014 Paxos (@PaxosGlobal) February 8, 2023<\/a><\/p><\/blockquote>\n Paxos also claims on its website that its BUSD and USDP token reserves are backed wholly in U.S. Dollars and U.S.Treasuries. <\/p>\n Related: <\/em><\/strong>New York State issues guidance for banks seeking to engage in activities with crypto<\/em><\/strong><\/a><\/p>\n If reports of the investigation are true, it wouldn\u2019t be the first one initiated by the NYDFS over the last year.<\/p>\n Coinbase Global U.S. reached a $100 million settlement<\/a> with the New York regulator on Jan. 4 after they found that they failed to look over about 100,000 suspicious transactions from customers who opened accounts without sufficient background checks.<\/p>\n Shortly after Terra LUNA ecosystem <\/a>and its failed algorithmic stablecoin TerraClassicUSD (USTC) collapsed in May, 2022, the NYDFS published stablecoin guidanc<\/a>e report to ensure stablecoin issuers fully back their assets and attest regularly.<\/p>\n Cointelegraph reached out to Paxos and Binance to comment on the matter but did not receive an immediate response. <\/p>\n <\/p>\n<\/div>\n\n