Paxos’ accidental minting of $300 trillion pyusd on Wednesday, while no doubt about it, serves as a case study in why blockchain can shine a light on traditional banking.
On Wednesday, Paxos made a mistake PayPal minted $300 trillion worth of USD (PYUSD) StableCoin, describing it as an “internal technical error.”
Importantly, however, blockchain allowed its error to be quickly identified and corrected.
The incident occurred on October 15 at 7:12 PM UTC, and the entire amount was burned in just 22 minutes, while the audience was immediately caught.
The same cannot be said for the traditional banking sector.
“Mistakes happen in every financial system – the difference with blockchain is that it’s visible, traceable, and quickly corrected,” Kate Cooper, the CEO of OKX Australia, told Cointelegraph. “That transparency is a strength, not a flaw,” he added.
Cooper, who spent nearly a decade as an executive at both Australia’s largest banks Prior to pivoting to crypto, the Paxos incident was said to highlight how open and transparent the blockchain is Transform finance.
“As a former banker, I see this as proof that visibility builds trust. The same rail that exposes an error can also strengthen governance and modernize how value moves through the financial system.”
A level of accountability that is “unheard of” in traditional banking
Ryne Saxe, the CEO of Crosschain StableCoin Liquidity Platform Eco, noted that the blockchain offers a level of accountability rarely found in traditional finance.
“Perhaps an overlooked aspect of Onchain StableCoin’s economic inevitability is the benefit of transparency demanded from financial providers. It’s an extreme case, but it’s still instructive,” Saxe told Cointelegraph.
“This level of transparency, and real time coordination, is unheard of in today’s central banking economy.”
Banks have a history of finger fat transactions
In April 2024, Citigroup accidentally credit $ 81 trillion in the account of a client instead of $ 281, which took time to reverse the transaction. The media didn’t catch wind until nearly 10 months later.
In the same month, another Citigroup employee almost transferred $6 billion to a wealth client after pasting a customer account number into the Payment Amount box. It also took 10 months to report the incident.
In 2015, Deutsche Bank also made a mistake sent 28 billion euros ($32.66 billion) to one of its partners.
These events, of course, are the ones made public.
The Paxos incident was an “avoidable mistake”
However, the incident shows that StableCoin Companies operational controls need to be tightened and Risk Management Around the token issuance, Fireblocks’ vice president of security and trust, Shahar Madar, told Cointelegraph.
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“Minting $300 trillion is an avoidable mistake. StableCoin adoption is on the rise, and every issuer must ensure that their security policies are properly set up to manage the entire token lifecycle.”
“Mint, Transfer and Burn are highly sensitive operations, and there is no reason to settle for ‘soft’ implementation processes and manual checks,” added Madar.
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