Stablecoin issuer Paxos said a technical error led it to mint roughly 300 trillion PYUSD on Ethereum on Oct. 15, then burn the excess minutes later; the company says customer funds were not affected.
Key Takeaways:
- Paxos accidentally minted ~300,000,000,000,000 PYUSD (about $300 trillion at the dollar peg) and burned the excess within minutes after detecting the error. PYUSD’s price showed a momentary deviation before stabilizing.
- Paxos called it an “internal technical error,” denied any breach, and said customer funds are safe; the firm said it has addressed the root cause.
- The incident briefly disturbed some DeFi markets like Aave, prompting it to temporarily freeze PYUSD markets as a precaution.
On October 15, Paxos’ systems recorded a minting transaction that generated 300 trillion PYUSD tokens on Ethereum, which is an amount far exceeding its typical supply. On-chain records show that the tokens were sent to a burn address shortly after, effectively nullifying the excess supply within 20–30 minutes. Paxos posted on X (Twitter) stating that the event was “an internal technical error,” and reassured the public that no breach occurred and all customer funds were secure. Reporting from The Block, Decrypt, and Bloomberg corroborated the timeline and the company’s statement.
DeFi Platforms Respond as PYUSD Markets Pause
The incident drew immediate attention from DeFi platforms and blockchain observers. Aave temporarily froze PYUSD markets after alerts flagged the unusually large transaction. Omer Goldberg, founder of Chaos Labs, wrote on X (formerly Twitter) to announce the temporarily frozen PYUSD markets on Aave to fix and look on the issue while reassuring that the funds are safe.
Screenshots from Etherscan and social media feeds circulated widely, showing the mint and subsequent burn. Analysts highlighted that while the notional amount was astronomical, the transaction’s gas costs were minimal, underscoring how tooling mistakes can create high-visibility incidents even when there’s no real loss.
PYUSD Peg Briefly Dipped, ETH Remain Stable
Stablecoins are designed to maintain a $1 peg. PYUSD experienced a minor, short-lived deviation during the incident before returning to near $1 after Paxos burned the excess tokens. PYUSD is currently trading between $0.999 and $1.00.
Meanwhile, broader crypto market saw muted reactions. At the time of writing (12:00PM UTC), Ethereum (ETH) is trading at approximately $4,076.22, reflecting a modest dip around 0.8% over the past 24 hours. With its current RSI (14) of ~45, the token remains in neutral territory, suggesting no significant momentum.
Operational Errors Spotlight Stablecoin Oversight Risks
Even when quickly corrected, errors of this scale raise questions about governance, risk controls, and smart contract oversight for regulated stablecoin issuers. While the $300 trillion figure is largely symbolic, far exceeding global GDP, it highlights the potential for operational glitches to trigger market uncertainty, temporary trading pauses, and scrutiny from regulators and institutional counterparties. Paxos, as a major issuer connected to traditional finance, remains under watch for operational integrity.
What’s Next?
Paxos stated that it has resolved the underlying technical issue. Regulators, institutional partners, and market operators are likely to monitor post-incident reports and third-party attestations. For traders and DeFi users, this issue serves as a reminder of how important it is to observe smart contract activity actively and anticipate temporary operational freezes when unexpected on-chain events occur. Further disclosures or policy changes may influence market confidence in PYUSD and its issuer.
Summary
Paxos minted ~300 trillion PYUSD by mistake on Ethereum and burned the excess within minutes, citing an internal technical error and no customer impact. DeFi platforms like Aave briefly paused PYUSD markets; the peg normalized, while ETH traded steady. The event highlights operational risk for stablecoin issuers.
