Paxos' accidental minting of $300 trillion in PYUSD on Wednesday, while undoubtedly alarming, serves as a case study in why blockchain shines in traditional banking.
On Wednesday, Paxos accidentally minted $300 trillion worth of stablecoin PayPal USD (PYUSD), calling it an “internal technical error.”
But what is important is that blockchain technology allowed the error to be quickly identified and corrected.
The incident occurred on October 15 at 7:12 PM UTC, and the entire lot was incinerated after just 22 minutes, as onlookers discovered it almost immediately.
The same cannot be said about the traditional banking sector.
“Mistakes happen in every financial system – the difference with blockchain is that they are visible, can be tracked and corrected quickly,” Kate Cooper, CEO of OKX Australia, told Cointelegraph. “Transparency is a strength, not a flaw,” she added.
Cooper, who spent nearly a decade as an executive at two of Australia's largest banks before turning to cryptocurrencies, said the Paxos incident highlights how the openness and transparency of blockchain could transform financial oversight.
“As a former banker, I see this as evidence that visibility builds trust. The same rails that expose error can also strengthen governance and modernize how value moves through the financial system.”
A level of accountability “unheard of” in traditional banking
Ren Sachs, CEO of stablecoin liquidity platform Eco, noted that blockchain provides a level of accountability rarely found in traditional finance.
“Perhaps the most overlooked aspect of the inescapable stablecoin economy is the benefit of transparency required from cash issuers. This was an extreme case, but still useful,” Sachs told Cointelegraph.
“This level of transparency, and real-time coordination, is unheard of in today’s central bank economy.”
Banks have a history of finger transactions
In April 2024, Citigroup accidentally credited $81 trillion to a customer's account instead of $281, taking hours to reverse the transaction. The media did not hear about him until about 10 months later.
In the same month, another Citigroup employee transferred nearly $6 billion to a Wealth client after pasting the client's account number into the payment amount box. It also took 10 months to report the incident.
In 2015, Deutsche Bank also mistakenly sent 28 billion euros ($32.66 billion) to one of its partners.
These incidents, of course, are the only ones that have been reported.
Paxos incident remains an 'avoidable mistake'
However, the incident shows that stablecoin companies need to tighten operational controls and risk management around token issuance, Fireblocks' vice president of security and trust products, Shahar Madar, told Cointelegraph.
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“Minting $300 trillion is an avoidable mistake. Adoption of stablecoins is on the rise, and every issuer must ensure that their security policies are properly set up to govern the entire token lifecycle.”
Madar added: “The mint, transport and burning processes are very sensitive processes, and there is no reason to be satisfied with the ‘soft’ implementation of manual processes and checks.”
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