Stablecoin issuer Paxos is being investigated by New York state authorities, but the reason is unknown.
According to CoinDesk, stablecoin issuer Paxos is being investigated by the New York Financial Services Authority (NYDFS). However, the purpose of the investigation remains unclear.
— db (@tier10k) February 9, 2023
Paxos is the de facto issuer of two stalecoins USDP (formerly PAX), as well as BUSD – the stablecoin branded by the world’s largest cryptocurrency exchange Binance.
Earlier, it was reported that Paxos was requested by the US Office of the Comptroller of the Currency (OCC) to withdraw its application for a banking license, which was denied by the company.
NYDFS is the regulator of cryptocurrency companies within the state of New York through a BitLicense license.
In June 2022, the agency published a set of stablecoin rules following the LUNA-UST crash, requiring stablecoin issuers to ensure adequate collateral and segregated user assets.
According to updated data as of January 31, 2023, Paxos is managing $16.15 billion in collateral for BUSD, of which cash accounted for 3.94%, US Treasury bonds accounted for 20.58% and acquisition contracts accounted for 75.48%.
In mid-December 2022, BUSD was slightly depeg when the FUD series on Binance peaked and investors rushed to withdraw USDC from the exchange.