Paxos Accidentally Mints $300 Trillion ‘Excess’ PayPal Stablecoin
Paxos, the issuer of PayPal’s PYUSD stablecoin, said Wednesday (Oct. 15) that it accidentally minted “excess PYUSD” and then removed the excess from circulation.
CNBC reported Thursday (Oct. 16) that excess PYUSD amounted to $300 trillion, an amount that is more than the dollars in global circulation and more than double the world’s estimated total gross domestic product.
Paxos announced the error in a Wednesday post on X: “At 3:12 PM EST, Paxos mistakenly minted excess PYUSD as part of an internal transfer. Paxos immediately identified the error and burned the excess PYUSD.”
“This was an internal technical error,” the company said in the post. “There is no security breach. Customer funds are safe. We have addressed the root cause.”
PayPal did not immediately reply to PYMNTS’ request for comment.
According to the CNBC report, Paxos fixed the mistake after about 20 minutes.
PYUSD has a market cap of $2.6 billion, making it the world’s sixth-largest stablecoin, per the report.
According to the Paxos website, the digital assets issued by Paxos are backed by 1:1 redemption, held in accounts protected from bankruptcy and regulated by the New York Department of Financial Services.
In addition to PYUSD, other dollar-backed stablecoins issued by Paxos include USDG, USDL and USDP, per the website. The company also issues PAXG, which it said is backed by gold.
Paxos agreed to pay a $48.5 million settlement to the New York DFS in a case the regulator said was related to the company’s failure to conduct proper due diligence into cryptocurrency exchange Binance, its former partner, and “systemic failures” in Paxos’ anti-money laundering program.
The DFS said that in addition to paying a $26.5 million penalty due to those deficiencies, Paxos would invest $22 million into its compliance program.
PayPal introduced PYUSD in August 2023, saying the U.S. dollar-pegged stablecoin is issued by Paxos and lets customers fund purchases with the stablecoin by choosing it at checkout and convert any of the cryptocurrencies supported by PayPal to and from PYUSD.
The company said at the time that PYUSD is “designed to contribute to the opportunity stablecoins offer for payments and is 100% backed by U.S. dollar deposits, short-term U.S. Treasuries and similar cash equivalents.”
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