Paxos

Paxos is a multi-line cryptocurrency platform providing itBit, a cryptocurrency trading platform; cryptocurrency brokerage; settlement services; U.S. dollar stablecoin; and a gold backed coin, PAX Gold. The company was founded in 2012 by Charles Cascarilla and Richmond Teo, and is backed by a consortium of venture capital firms - RRE Ventures, Canaan Partners and Liberty City Ventures - as well as by individual investors Jay W. Jordan II and James Pallotta. 
Originally called itBit, the company officially rebranded as Paxos in September 2016, migrating its blockchain projects to a new entity under which itBit now sits as a separate division. "Paxos" now houses itBit's distributed ledger efforts, thereby separating this division from its bitcoin exchange and over-the-counter trading services. ItBit was the first Bitcoin exchange to be licensed by the New York State Department of Financial Services, New York's top financial regulator.
Paxos began accepting U.S. customers in May 2015 after being granted a license to operate by the New York State Department of Financial Services (NYSDFS). It is regulated by the NYSDFS as a trust company.
== Products and Services ==
=== PAX stablecoin ===
Paxos Trust Company, the successor to itBit Trust Company, was licensed on September 10, 2018 by the New York State Department of Financial Services (NYDFS) to issue a stablecoin - that is, a virtual currency tied to the value of a fiat currency. The coin is called Paxos Standard (PAX) and is tradable on Paxos's cryptocurrency exchange, itBit, as well as on 75 other cryptocurrency exchanges. In mid May 2019, PAX was the 39th largest cryptocurrency by market capitalization according to CoinMarketCap, an online industry data reporting service. 
One PAX should have the value of one U.S. dollar, according to the Paxos website. While Bitfinex, Tether and Tether's USDT were being investigated for criminal fraud by the Attorney General of New York, Paxos announced on May 13, 2019, that PAX could be redeemed instantly on the Paxos platform. Delays in redeeming their coins have been a persistent problem for stablecoin users. 
The company suffered headaches in late 2018 over its competitor, Gemini, when some traders took advantage of an arbitrage opportunity between Gemini dollars (GUSD) and Paxos' stable coin, PAX. Traders bought GUSD at a 2 percent discount and exchanged vast sums of it for PAX, and then opened accounts under relatives' names to bypass the $10k transaction limit on Huobi, another exchange. In order to redeem those coins for US dollars, they had to go through the original issuer - Paxos. The result was huge numbers of users wanting to cash out their new PAX coins.
In a March 11, 2019, interview with Fortune's The Ledger, Cascarilla said that Paxos was planning on issuing a stablecoin backed by gold "definitely this year." He noted that Paxos's status as a trust company allowed it access to the banking system which would provide transparency and legal certainty around their holding gold. Cascarilla also told The Ledger that Paxos had applied to the U.S. Securities and Exchange Commission for permission to tokenize securities. He did not provide a launch date for that product.
=== Huobi stablecoin (HUSD) ===
In July 2019, a digital asset startup called Stable Universal, which was backed by Huobi, launched a stablecoin called HUSD. The stablecoin is tradeable on the Huobi Global exchange as an alternative to Tether, according to a statement by Huobi.
=== Binance USD (BUSD) ===
Paxos and the Malta-based exchange Binance announced on September 5, 2019, that Paxos would issue a New York State Department of Financial Services-approved U.S. dollar-backed stablecoin called Binance USD (BUSD). It is an ERC-20, Ethereum-based token, issued and redeemable through the Paxos wallet in exchange for U.S. dollars or PAX stablecoins. Paxos also serves as the custodian of the coin's fiat currency reserves. Initially, it traded against bitcoin, Binance Coin (BNB) and Ripple (XRP) on Binance.
On February 13, 2023, Paxos said it would end its relationship with Binance over BUSD, which was used to help traders move more quickly in and out of the crypto market. The sector's regulator, the New York Department of Financial Services, had called a halt to minting BUSD starting February 21, 2023, as authorities moved to ramp up their scrutiny of cryptocurrency market practices. The NYDFS cited “several unresolved issues” related to Paxos’s oversight of its relationship with Binance for the token. Paxos said existing tokens would remain redeemable to customers for at least a year. It also said that all the BUSD tokens it had issued were backed 1:1 with US dollar-denominated reserves and were fully segregated and held in bankruptcy remote accounts.
=== Blockchain equities ===
In October 2019, Paxos announced that it would launch blockchain-settled, U.S.-listed equities after receiving a no-action letter from the SEC, which means the SEC will not take enforcement action against them. According to Charles Cascarilla, CEO and co-founder of Paxos, most of the equities listed by Paxos will be "generally liquid," large-cap, low-volatility stocks.
=== Brokerage ===
In October 2020, PayPal announced it had partnered with Paxos to enable buying and selling of cryptocurrency via PayPal, and eventually Venmo, starting in 2021. Paxos will be responsible for ensuring the regulatory compliance of the new service, using its technological assets to facilitate payments, providing liquidity, and managing private keys for PayPal customers' wallets.
=== Clearing ===
In February 2021, Paxos announced its intention to file an application to begin offering clearing services with the SEC. Paxos' CEO and Founder Charles Cascarilla said on Coindesk TV that Paxos already settles U.S. equity trades, and that Paxos was committed to becoming a markets infrastructure business similar to the Depository Trust & Clearing Corporation (DTCC). 
The company announced on April 6, 2021 that it had settled U.S. equity trades between Instinet and Credit Suisse on the private, permissioned Paxos Settlement Service blockchain within the targeted T+0 (same day) timeframe. The service was offered in accordance with no-action relief from the SEC. Paxos said that it planned to apply to the SEC for a clearing agency license and hoped to be registered with the agency later that year.
== History ==
The company was founded in Singapore in 2012, and launched in November 2013 after receiving $5.5 million in funding. 
In May 2015, the itBit Trust Company became the first company to receive a charter from the NYSDFS which, according to CEO Charles Cascarilla, allows the exchange to operate in all 50 states.
Upon receiving the charter, the company was able to secure an additional $25 million in seed funding. Also, itBit announced the appointment of three board members, former FDIC chair Sheila Bair, former U.S. Senator Bill Bradley and Morgan Stanley's Robert Herz.
itBit's announcement of a partnership with an undisclosed U.S. bank means that U.S. customers of the exchange will have their deposits held by said bank and insured up to $250,000 by the FDIC.
On June 21, 2016, Euroclear and itBit announced a collaboration to explore opportunities in creating a new settlement service for the London gold market using ItBit's proprietary blockchain infrastructure technology and flagship product, Bankchain. In December 2016, Paxos and Euroclear announced that they had completed a test of 600 gold bullion trades on Bankchain, the blockchain-based post-trade platform, with a group of banks that included, among others, Scotiabank, Citibank and Societe Generale. In late July 2017, however, Euroclear and Paxos announced the end of their pursuit of a joint precious metals settlement platform.
In September 2016 Paxos rebranded itself from itBit, which survived the rebranding as a division of Paxos. Paxos was to leverage itBit's distributed ledger technologies. 
In December 2016, Paxos and Euroclear announced that they had completed a test of 600 gold bullion trades on Bankchain, a blockchain-based post-trade platform with a group of banks that included, among others, Scotiabank, Citibank and Societe Generale. In late July 2017, however, Euroclear and Paxos announced the end of their pursuit of a joint precious metals settlement platform. On May 17, 2018 the NYDFS licensed Paxos to offer Bankchain commercially. 
With a May 2018 Series B raise of $65 million, Paxos has raised a total of at least $93.3 million in funding.
In November of 2019, the SEC gave the green light to a pilot project led by Paxos in which blockchain would be used to settle trades in stocks in a small subset of the U.S. market in the hope of constructing a faster and cheaper way to process stock trades.
In December 2020, Paxos filed an application with the Office of the Comptroller of the Currency to become a cryptocurrency custodian.
Paxos received a license from the Monetary Authority of Singapore (MAS) in November of 2022 to offer digital payment token services under the Payment Services Act 2019. 
On Feb. 9, 2023, CoinDesk reported that The New York Department of Financial Services (NYDFS) was investigating Paxos, and on Feb. 13 Paxos said it would end its relationship with Binance for BUSD.
== Key People ==
itBit Team:
*Charles Cascarilla, CEO and Co-Founder
*Andrew Chang, COO
*Richmond Teo, CEO of Asia and Co-Founder
*Walter Hessert, Head of Strategy
*Nick Selby, Chief Security Officer & Director of IT
*Daniel Burstein, General Counsel & Chief Compliance Officer
*Dorothy Chang, VP of Marketing & Comms
Board of Directors:
*Sheila Bair
*Bill Bradley
*Patricia Kemp
*Jim Manzi
*Scott Malpass
*Brian Stern
Board of Advisors:
*Josh Rosner
*Richard Kang
*James Aitken
== References ==
Category:stablecoin
Category:cryptocurrency
Category:cryptocurrency trading platform
Category:CryptoMarketsWiki