Paxos Mistakenly Mints $300T in PYUSD Tokens

The staggering scale of Paxos’s error became apparent last week when the company mistakenly minted 300 trillion PYUSD tokens on the Ethereum blockchain—a value exceeding $300 trillion and more than twice the entire global GDP. According to Paxos co-founder and CEO Charles Cascarilla, the error resulted from “rarely-used manual operational processes” designed for “very secure cold minting processes” that were intended to provide maximum security but instead led to the colossal miscalculation. The company detected the error “within a minute or two” and burned all the tokens just 24 minutes after creation, confirming the tokens never left Paxos’s internal systems.

Cascarilla addressed the Federal Reserve crypto roundtable, characterizing the incident as a “manual security lapse” that caused the firm to create the tokens before immediately sending them to an inaccessible address. While emphasizing that the mistake “should never diminish how seriously we take this,” the CEO maintained that “the mistake was entirely ours” and acknowledged the company “didn’t operate at the standards that we expect of ourselves.” The transparency of the blockchain allowed for immediate identification and resolution, with Republic Technologies CEO Daniel Liu noting this visibility “could prevent future financial crises” by eliminating the uncertainty that often leads to bank runs.

Industry reaction highlighted both the seriousness of the error and the unique advantages of blockchain technology. Bitcoin.com CEO Corbin Fraser quipped on X that Paxos essentially “forgot to use the Eth to gwei calculator,” while Daniel Liu 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 explained, contrasting this with traditional finance where companies might handle such issues privately and disclose them only after the fact.

The timing of the $300 trillion error could not be more consequential for Paxos, which is currently seeking a national trust charter from the Office of the Comptroller of the Currency. This application follows similar national bank charter applications from stablecoin competitors Circle and Ripple, and comes amid increased regulatory scrutiny following the passage of President Donald Trump’s GENIUS Act, which has brought federal recognition and oversight to dollar-backed digital assets. Critics are now questioning whether Paxos should receive federal banking authority after demonstrating such significant operational vulnerabilities.

The incident represents a critical test case for how regulators will approach operational errors in the emerging digital asset banking sector. While Paxos leadership has emphasized the rapid detection and resolution of the error as evidence of blockchain’s advantages, regulators at both the OCC and Federal Reserve must weigh whether the company’s manual processes and internal controls meet the standards expected of federally-chartered financial institutions. The $300 trillion figure—while never posing actual financial risk due to immediate correction—nonetheless represents a staggering failure of internal controls that would be unacceptable in traditional banking.

Daniel Liu of Republic Technologies predicted that “this incident will likely cause only short-term reputational damage,” noting that similar “fat finger” events happen in traditional finance too. “Given that there were no real losses, they should be able to recover from this quickly,” he told Decrypt. However, Liu 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.” This perspective highlights the ongoing maturation of the cryptocurrency industry as it seeks to align with traditional financial standards while leveraging blockchain’s unique capabilities.

The Paxos incident occurs against a backdrop of significant growth in the stablecoin market, which has gained increased importance following the GENIUS Act’s passage. According to data from Myriad Markets, the total market capitalization of stablecoins—including major players like Tether’s USDT and Circle’s USDC—is currently hovering around $308 billion, with predictions that it will surpass $360 billion before February next year. This growth underscores the increasing significance of stablecoins in the broader financial ecosystem and the corresponding need for robust operational controls.

The PYUSD token at the center of the incident is PayPal’s stablecoin offering, representing the payment giant’s entry into the digital asset space through its partnership with Paxos. The error, while quickly corrected, raises questions about the operational infrastructure supporting major corporate entries into cryptocurrency. As more traditional financial institutions and technology companies explore stablecoin offerings, the Paxos incident serves as a cautionary tale about the importance of automated controls and thorough testing of manual processes, even those intended for rare use cases.

Looking forward, the industry appears poised for continued growth despite operational challenges. The transparency demonstrated in the Paxos incident—where the error was immediately visible on the Ethereum blockchain and quickly addressed—contrasts with traditional financial systems where similar errors might remain hidden for extended periods. As Daniel Liu noted, this visibility represents a fundamental advantage of blockchain technology, though it must be paired with improved operational safeguards. The coming months will reveal whether regulators view the incident as a demonstration of blockchain’s strengths or as evidence that companies like Paxos require further maturation before receiving federal banking charters.