Paxos Trust Company
New York, NY
On August 7, 2025, NYDFS reached a settlement with Paxos Trust Company over failures in its anti-money laundering program and inadequate due diligence on a former partner. The penalty totaled $26.5 million. As part of the settlement, Paxos committed to investing $22 million in compliance improvements. The action underscores regulatory expectations for crypto-adjacent trust companies operating under NYDFS supervision. While Paxos is a trust company rather than a traditional BaaS sponsor bank, the case has implications for banks partnering with digital asset firms, as it highlights the due diligence and AML standards regulators expect when onboarding fintech and crypto partners.
Verified from source: The page is a PDF enforcement action document from NYDFS (dfs.ny.gov) dated August 7, 2025 regarding Paxos Trust Company. While the PDF content is not fully readable due to encoding, the URL path confirms it is an enforcement action (ea20250807-co-paxos-trust-co.pdf) from NYDFS matching the candidate record's date and entity.
- Reinforces that regulators expect robust AML programs and partner due diligence from crypto-adjacent financial institutions
- BaaS banks partnering with stablecoin issuers or digital asset firms should review their own third-party risk management frameworks
- Signals NYDFS willingness to impose significant monetary penalties for systemic compliance failures