In short
- Paxos accidentally minted 300 trillion PYUSD tokens last week before burning them 24 minutes later in what the company on Wednesday called an “internal technical error” that never left its systems.
- The Paxos co-founder said “the fault was entirely ours” and blamed rarely used manual operational processes designed for “highly secure cold minting processes”.
- The incident comes as Paxos seeks a national trust charter from the OCC under the GENIUS Act, with critics questioning whether the company should receive federal banking authority after the $300 trillion blunder.
On Wednesday, Paxos CEO Charles Cascarilla tried to frame the company’s accidental minting of $300 trillion in PayPal’s stablecoin last week as evidence of blockchain transparency rather than a system flaw.
He told a Federal Reserve crypto roundtable that a manual security error caused the company to create the tokens on Ethereum before immediately sending them to an inaccessible address.
The error, more than twice the value of global GDP, comes as regulators consider whether to grant Paxos a federal banking charter.
“It underlines the value of the blockchain. It actually shows the transparency you can have immediately about what’s going on,” Cascarilla said.
“The fault was entirely ours. Certainly, we were not operating to the standards we expect of ourselves,” the director added, explaining that the company’s manual processes were “put in place for a purposeful reason to create highly secure cold minting processes, but it is something we rarely use.”
“It’s a stretch to say we forgot to use the Eth to gwei calculator,” said Corbin Fraser, CEO of Bitcoin.com joked on X, in response to the Paxos CEO’s statement.
The company knew “within a minute or two” and confirmed that the tokens never left its internal systems, although the executive stressed that this should “never diminish how seriously we take this,” Cascarilla said.
Daniel Liu, CEO of Republic Technologies, shared Declutter of which transparency was “absolutely a strength”. blockchain networks.
“When these types of incidents occur within the chain, it is easy for both humans and machines to identify them and immediately alert the relevant parties to take action,” Liu told Decrypt. “This is much better than waiting for a company to deal with such issues privately and only disclosing them to the public after the fact.”
The company is currently seeking a national trust charter from the Office of the Comptroller of the Coin, following in the footsteps of previously announced charter applications for national banks from stablecoin firm Circle and Ripple.
He noted that this level of visibility could prevent future financial crises, noting that “you’re under attack in banks because you don’t know what you don’t know.”
“This incident is likely to cause reputational damage only in the short term,” Liu added, saying that similar “fat finger” events also occur in the traditional financial world, and “since there were no real losses, they should be able to recover from this quickly.”
He acknowledged that “we can still do more,” calling the event “a reminder that crypto, like traditional finance, needs robust safeguards to manage and control incidents.”
Stablecoins have grown in significance this year following the passage of President Donald Trump’s GENIUS Act, a major piece of legislation that brought federal recognition and oversight of dollar-backed digital assets.
Users from countless markets predict the total market capitalization of stable coins to surpass $360 billion by February next year. The total, including Tether’s USDT and that of Circle USDCcurrently hovering around $308 billion.
Disclaimer: Myriad is owned by Decrypt’s parent company Dastan
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