Paxos Trust has agreed to a settlement of $48.5 million due to allegations from New York’s financial regulator that Paxos failed to prevent illegal activities linked to Binance.

The regulator pointed out that Paxos was required to review Binance’s exposure to illegal activity, and the findings revealed that approximately $1.6 billion in transactions on Binance involved malicious actors such as Ponzi schemes and individuals sanctioned in darknet marketplaces from 2017 to 2022.

Paxos’ Compliance Issues

In February 2023, New York ordered Paxos to cease issuing Binance’s stablecoin, marking the end of their partnership due to the identified compliance issues. Paxos stated it was pleased with the settlement and that no customer accounts were affected by the remediation efforts.

Binance’s Legal Challenges

Binance faced legal challenges related to its operations. In 2025, Nigerian lawmakers sued Binance for $81.5 billion in damages, accusing it of causing economic losses and unpaid taxes. Following this, two executives were detained as crypto websites emerged as trading platforms for the local currency.

Additionally, in June 2023, the U.S. Securities and Exchange Commission (SEC) sued Binance, alleging that the firm had artificially inflated trading volumes, diverted customer funds, and misled investors about its market surveillance controls. Despite this lawsuit, Binance engaged in discussions with the SEC to negotiate a deal that would avoid a total asset freeze, aiming to protect billions of dollars in customer funds without shutting down the exchange.