In brief
- Paxos mistakenly 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 mistake was entirely ours” and blamed rarely-used manual operational processes designed for “very secure cold minting processes” for the error in the amount minted.
- 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 Chief Executive Charles Cascarilla attempted to frame the company’s accidental minting of $300 trillion worth of PayPal’s stablecoin last week as evidence of blockchain transparency rather than a system failure.
He told a Federal Reserve crypto roundtable that a manual security lapse caused the firm 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 underscores the value of the blockchain. It actually shows the transparency that you can immediately have into what’s going on,” Cascarilla said.
“The mistake was entirely ours. Certainly, we didn’t operate at the standards that we expect of ourselves,” the executive added, explaining the company’s manual processes were “put into place for a deliberate reason in terms of being able to create very secure cold minting processes, but it’s something that we rarely use.”
“A long way to say we forgot to use the Eth to gwei calculator,” Bitcoin.com CEO Corbin Fraser quipped on X, in response to Paxos CEO’s statement.
The company knew “within a minute or two” and confirmed the tokens never left its internal systems, though the executive stressed this “should never diminish how seriously we take this,” Cascarilla said.
Daniel Liu, CEO of Republic Technologies, told Decrypt that transparency was “definitely a strength” of blockchain networks.
“When incidents like this occur on-chain, it’s easy for both people and machines to identify them and immediately alert the relevant parties to take action,” Liu told Decrypt. “This is far better than waiting for a company to handle such issues privately and disclose them to the public only after the fact.”
The company is currently seeking a national trust charter from the Office of the Comptroller of the Currency, following in the footsteps of previously announced national bank charter applications from stablecoin firm Circle and Ripple.
He noted this level of visibility could prevent future financial crises, noting “you get run on banks is because you don’t know what you don’t know.”
“This incident will likely cause only short-term reputational damage,” Liu added, saying similar “fat finger” events happen in traditional finance too, and “given that there were no real losses, they should be able to recover from this quickly.”
He acknowledged that “there’s still more we can do,” calling the episode “a reminder that crypto, like traditional finance, needs robust safeguards to contain and control incidents.”
Stablecoins have grown in significance this year following the passage of President Donald Trump’s GENIUS Act, a key piece of legislation that has brought federal recognition and oversight to dollar-backed digital assets.
Users of Myriad Markets predict the total market cap of stablecoins to surpass $360 billion by February next year. The total, which includes the likes of Tether’s USDT and Circle’s USDC, is currently hovering around $308 billion.
Disclaimer: Myriad is owned by Decrypt’s parent company Dastan
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Source: https://decrypt.co/345584/paxos-co-founder-transparency-silver-lining-300t-stablecoin-snafu
