- Paxos mistakenly created $300 trillion worth of Paypal‘s stablecoin, PYUSD.
- The incident was an internal technical error and did not threaten customer funds.
- All mistakenly minted tokens remained inside Paxos crypto wallets and were quickly destroyed.
- The event revealed problems in Paxos’ incident response, taking 22 minutes to undo the mistake.
- Paxos recently applied for a national banking charter, and it is not clear if this error will impact their application.
On Wednesday, Paxos, a New York-based financial company, minted $300 trillion worth of PayPal’s stablecoin PYUSD by mistake during a series of unusual blockchain transactions. The error occurred internally, and no customer assets were put at risk.
Onchain records show that Paxos quickly destroyed the incorrectly minted PYUSD tokens, which never left the company’s internal crypto wallets. According to a company statement, it was an “internal technical error” and “There is no security breach. Customer funds are safe. We have addressed the root cause.“
Yehor Rudytsia, an expert from blockchain security firm Hacken, noted that the mistake “revealed problems in Paxos’s incident response.” He pointed out that while Paxos noticed the problem immediately, it took 22 minutes to remove the erroneously minted tokens from their system. Prior to the $300 trillion minting mistake, the same wallet burned $300 million PYUSD, then minted and burned $300 trillion, and finally minted $300 million, indicating a likely intention to create only $300 million worth of the stablecoin.
The sequence of unusual transactions suggests that a technical error caused Paxos to mint a much larger amount than planned. Similar errors have happened before in the industry. In 2019, Tether accidentally minted $5 billion instead of $50 million in its USDT stablecoin due to a decimal error, as noted by then CTO Paolo Ardoino. In 2023, Binance minted $500 million in Wrapped Ethereum (WBETH) before later correcting the mistake.
This incident comes after Paxos submitted an application in August to turn its New York State trust charter into a national trust charter under the Office of the Comptroller of the Currency. The company states this would place it under U.S. federal oversight, highlighting its commitment to high regulatory standards. It is not yet known whether the $300 trillion error will affect this application. Paxos has not commented further on the incident.
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