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PayPal's crypto partner mistakenly mints $300 trillion worth of stablecoins: ‘Technical error’ explained
Paxos assured customers there was no security breach and their funds were safe, after mistakenly minting $300 trillion worth of stablecoins.
PayPal's blockchain partner, Paxos, mistakenly minted $300 trillion worth of stablecoin on Wednesday. The company put it down to a ‘technical error’.
The incident came to light when market watchers caught the enormous injection of PayPal PYUSD stablecoin on Etherscan, which is a block explorer and analytics platform used for the Ethereum blockchain, as per CNBC.
What Paxos said about the ‘technical error’
Paxos, in a social media statement, explained they had minted the stablecoins as part of an internal transfer. It added that it ‘immediately identified the error and burned the excess PYUSD.’
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“This was an internal technical error. There is no security breach. Customer funds are safe. We have addressed the root cause," Paxos continued.
Etherscan transactions reportedly showed that the mistake had been fixed after 20 minutes. The error from Paxos comes at a time when stablecoins are becoming more mainstream and are even being adopted by an increasing number of banks and payment platforms.
What to know about PYUSD
PYUSD is billed as a dollar-pegged stablecoin, fully backed by US dollar deposits, US treasuries, and other similar cash equivalents. PayPal states that the tokens are redeemable for US dollars on a 1:1 basis.
PYUSD is now the sixth-largest stablecoin in the world and has a market capitalization of over $2.6 billion, as per CoinMarketCap data.
Notably, there aren't enough dollars circulating in the globe which would allow $300 trillion PYSUD to be repaid, and it would theoretically need over twice the world's estimated total GDP, as per CNBC.
The error also highlighted the fact that stablecoin isn't automatically supported by the US dollar but by PayPal via its independent third-party attestation reports, as per the publication.
This isn’t the first such slip. In 2019, stablecoin giant Tether mistakenly minted — and quickly burned — $5 billion in USDT. In crypto, misrouted transactions have cost users millions, often permanently. However, stablecoins like PYUSD exist in a hybrid zone: blockchain-native yet issuer-controlled, regulated yet still governed by software. They are programmable liabilities — money that can vanish with a few lines of code, or proliferate anew.
(With Bloomberg inputs)
