Paxos Trust has agreed to pay a USD 48.5 million settlement over allegations from New York’s financial regulator that it failed to prevent illegal activity related to Binance.
The regulator mentioned that it required Paxos to review Binance’s exposure to illegal activity, which found that from 2017 to 2022, approximately USD 1.6 billion of transactions from Binance’s platform involved malicious actors. These included Ponzi schemes and individuals sanctioned in darknet marketplaces. New York's financial services superintendent mentioned that Paxos will have to pay USD 26.5 million for a civil fine and spend USD 22 million to upgrade its compliance programme.
Binance-related laps
Binance processed transactions involving entities sanctioned by the US Office of Foreign Assets Control, according to the regulator’s review. In February 2023, New York ordered Paxos to stop issuing Binance’s stablecoin, and this is when the companies ended their partnership.
When it comes to the current situation, Paxos mentioned that it was pleased to settle, having remediated the compliance issues with no customer accounts affected. Binance was not a defendant in the New York case. In 2023, it entered a guilty plea and accepted a USD 4.32 billion criminal penalty for violating federal AML requirements and sanctions laws. The US Securities and Exchange Commission dismissed its civil case against Binance in May due to a change in approach toward crypto during President Donald Trump’s second White House term.
Other legal incidents that involved Binance
In February 2025, Nigerian lawmakers sued Binance, which paid USD 81.5 billion in damages for alleged economic losses and unpaid taxes. The authorities blamed the crypto exchange firm for the region’s currency troubles and detained two executives in 2024, after crypto websites emerged as platforms of choice for trading in the local currency.
Additionally, the SEC sued Binance in June of 2023, accusing the firm of artificially inflating trading volumes, diverting customer funds, and misleading investors about its overall market surveillance controls. In the same period, Binance has engaged in talks with the US Securities and Exchange Commission to work on a deal that avoids a complete asset freeze. In essence, the deal aimed to protect USD billions in customer funds without shutting the exchange down as the SEC’s lawsuit proceeds.
