Market News

NYDFS Investigates Paxos Following $300 Trillion Stablecoin Minting Blunder

The New York Department of Financial Services (NYDFS) has confirmed that Paxos accidentally minted an astounding $300 trillion worth of PayPal USD (PYUSD) stablecoins on October 15, 2025.

The incident temporarily inflated the supply of PYUSD beyond the entire global economic value, prompting serious scrutiny of the operational risks within the stablecoin sector.

According to reports, the error originated from a routine internal transfer intended for $300 million but escalated due to a technical oversight resulting in a colossal surplus.

Paxos quickly recognized the mistake and took swift action to revoke the excess minting, restoring balances and asserting that no customer funds were compromised.

This incident highlights significant concerns regarding collateralization in the stablecoin industry and has reignited conversations about the need for improved oversight measures.

Experts argue that implementing a Proof of Reserve (PoR) system could provide vital real-time validation of collateral and prevent such unprecedented errors in the future.

The event provoked substantial debate, with questions arising regarding the operational protocols of firms within this rapidly evolving market.

Markets reacted with skepticism, pointing out that such a vast minting error raises questions about systemic vulnerabilities and the potential for market manipulation.

As regulatory bodies like the NYDFS continue to investigate, this situation may accelerate calls for mandatory PoR integrations and more stringent auditing standards for stablecoins.

The Paxos incident serves as a stark reminder that even established entities can experience critical failures, emphasizing the importance of robust operational controls in the stablecoin ecosystem.