Paxos Trust agreed to a settlement of $48.5 million following allegations by New York’s financial regulator that it failed to prevent illegal activities linked to Binance.
According to the regulator, Paxos was required to review Binance’s transactions from 2017 to 2022. This review revealed that approximately $1.6 billion in transactions on Binance’s platform involved malicious actors—specifically, individuals and schemes engaged in Ponzi scams or activities found on darknet marketplaces. The regulator further stated that Paxos will face a civil fine of $26.5 million and needs to invest $22 million into improving its compliance program.
Binance’s Related Issues
Between 2017 and 2022, Binance processed transactions involving entities sanctioned by the US Office of Foreign Assets Control (OFAC). In February 2023, New York mandated Paxos to cease issuing Binance’s stablecoin, leading to the termination of their partnership.
Paxos expressed satisfaction with settling the case, noting that no customer accounts were affected. Meanwhile, it was revealed that Binance entered a guilty plea in 2023 and paid a $4.32 billion criminal penalty for violating federal anti-money laundering (AML) requirements and sanctions laws. The US Securities and Exchange Commission (SEC) dismissed its civil case against Binance due to a shift in regulatory approach during President Donald Trump’s second term.
Other Legal Incidents Involving Binance
In February 2025, Nigerian lawmakers initiated legal action against Binance, seeking $81.5 billion in damages for alleged economic losses and unpaid taxes. The authorities cited the crypto exchange as a contributing factor to Nigeria’s currency difficulties, with two executives arrested in 2024 due to their involvement with local cryptocurrency trading platforms.
In June 2023, the SEC filed suit against Binance, alleging that the company artificially inflated trading volumes, diverted customer funds, and misled investors regarding its market surveillance controls. Despite this, Binance was engaged in negotiations with the US Securities and Exchange Commission to avoid a full asset freeze, aiming to protect billions of customer funds while continuing operations through legal challenges.
