Paxos Trust Company is Under Scrutiny: NYDFS Investigates

• Paxos Trust Company is under the scrutiny of the New York Department of Financial Services.
• A person familiar with the matter told that the reason for the probe is still unclear.
• NYDFS told that the department has been trying hard to protect consumers from crypto risks. 

Paxos Trust Company, the New York-based financial institution designated with the issuance of Binance USD (BUSD) and Paxos Dollar (USDP) is under the scrutiny of the New York Department of Financial Services (NYDFS). As reported by a “person familiar with the matter” the reason for scrutiny is yet to be disclosed.

Recently, the company had been involved in scandals regarding the Federal Bank regulator, the US Office of the Comptroller of the Currency’s order to withdraw Paxos’s application for a full banking charter.

Despite rumors being solved in no time, it was understood from an ongoing investigation by the state regulator that a company owning a provisional bank charter from the OCC in 2021, would be under closer scrutiny than the other companies.

Significantly, in relation to the current probe on Paxos, an NYFDS told that the department is relentlessly putting effort into protecting consumers from the threats posed by crypto markets.

Furthermore, the NYFDS stated:

The department is in continuous contact with regulated entities to understand vulnerabilities and risks to consumers and the institutions themselves from crypto market volatility we are experiencing.

However, the spokesperson was reluctant to disclose further details of the current investigation and denied to explain even the cause of the probe.

Notably, NYDFS has been vigilant in securing the crypto community with reliable regulations, which is evident from the department’s previous efforts in publishing the stablecoin guidance in the last year.

By releasing the guidance the department directed the issuers to ensure that their stablecoins are pegged to assets in order to secure the crypto users.