Foreign media: The New York Financial Services Department said that Paxos did not manage BUSD in a “safe and stable” way

According to reports, a spokesman for the New York Financial Services Department (NYDFS) told Reuters on Monday that the management of the Paxos Trust Company’s stable and fixed currency BUSD made it open for use by bad actors. The spokesman said that Paxos “violated the obligation to carry out customized regular risk assessment and due diligence update for the BUSD customers issued by Coin and Paxos to prevent bad actors from using the platform, and the token was not managed in a safe and stable way”.

Interpretation of this information:

The recent news about the Paxos Trust Company’s stable currency BUSD suggests that the token has been made vulnerable to bad actors. The New York Financial Services Department (NYDFS) spokesman revealed that the token management violated the obligation to carry out customized regular risk assessment and due diligence update for BUSD customers issued by Coin and Paxos. The report indicated that the token was not managed in a safe and stable way.

The NYDFS is responsible for enforcing regulations on businesses in the financial services field in New York State, including cryptocurrency companies. While stablecoins like BUSD were created as safe havens for cryptocurrency investments that are less prone to the volatility of mainstream cryptos like bitcoin, they still remain a potential target for bad actors in the industry. In this case, the NYDFS spokesman revealed that BUSD’s management failed to perform the necessary checks and updates to ensure the token’s security, enabling bad actors to exploit the platform.

This news highlights the importance of regulations and compliance in the cryptocurrency industry. Though decentralized finance and crypto have emerged as an alternative to traditional finance, it is still necessary to enforce regulations to prevent fraud and protect investors. The NYDFS is taking this responsibility seriously, but it’s worth noting that some cryptocurrency businesses and enthusiasts view regulations as an infringement or threat to technological innovation. Nevertheless, the NYDFS’s action against Paxos reminds us that stability and security are crucial for the widespread adoption of cryptocurrencies.