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In a startling technical mishap, Paxos, the issuer of PayPal’s dollar-backed cryptocurrency accidentally minted 300 trillion PYUSD stablecoin tokens on the Ethereum blockchain late Wednesday. The error, which occurred at 7:12 p.m. UTC, resulted in one of the largest token creation events in crypto history before the company quickly reversed it within 30 minutes.
Blockchain data shows the enormous mint originated from one of Paxos’ hot wallets, prompting concern among on-chain analysts who initially mistook it for a potential exploit. However, the firm swiftly moved all PYUSD stablecoin tokens to a burn address 22 minutes later, permanently removing them from circulation.
In a statement on X (formerly Twitter), Paxos clarified that the incident stemmed from an “internal transfer error” and not a cyberattack.
“Customer funds are safe,” the company assured. “We have addressed the root cause and implemented safeguards to prevent recurrence.”
The minting glitch underscores the sensitivity and scale of PYUSD stablecoin operations, especially as regulatory scrutiny on digital dollar alternatives intensifies worldwide.
The accidental creation of 300 trillion PYUSD stablecoin tokens set off an immediate response across decentralized finance (DeFi) platforms. Omer Goldberg, founder of Chaos Labs which is a risk management firm working with Aave announced that Aave would temporarily freeze PYUSD trading pairs.
Goldberg described the mint as “an unexpected high-magnitude transaction,” prompting Aave’s automated risk protocols to intervene. The decision was purely precautionary, he added. When a sudden event of this scale occurs, freezing activity protects users and the protocol until the source is verified.
Despite the temporary pause, Nansen data shows that PYUSD stablecoin maintained relative price stability throughout the event. The token’s value dipped only about 0.5% from its $1 peg before quickly rebounding once Paxos confirmed and reversed the error.
Market observers noted that the stablecoin’s resilience reflects robust on-chain monitoring systems and effective communication from Paxos as a sharp contrast to the slow responses seen in past incidents involving algorithmic or uncollateralized tokens.
The $300 trillion mint far exceeded the U.S. national debt of roughly $37 trillion, as well as the global GDP of $117 trillion, highlighting just how massive the technical slip was. Analysts called it a reminder of the transparency and visibility that blockchain networks afford.
This was a purely procedural mishap, not a systemic risk, said Jacob Glick, senior blockchain engineer at Delphi Digital. The fact that the error was detected and resolved in minutes shows how open ledgers can help prevent lasting damage.
Following the incident, Paxos resumed normal operations, minting a routine 300 million PYUSD stablecoin tokens as part of its scheduled issuance cycle. The company reiterated that its internal controls were effective, despite the temporary glitch.
Still, critics say the event raises broader questions about governance in the stablecoin industry. With PYUSD stablecoin marketed as a regulated, fully backed asset under U.S. oversight, observers argue that even minor errors could undermine confidence if not handled transparently.
Launched in August 2023 under a partnership between PayPal and Paxos, the PYUSD stablecoin was designed to bridge traditional finance with Web3 applications. Backed 1:1 by U.S. dollar reserves and short-term treasuries, it now ranks as the sixth-largest stablecoin globally, with a market capitalization of $2.6 billion, according to CoinGecko.
It trails behind Tether (USDT), USD Coin (USDC), Ethena’s USDe, Dai (DAI), and World Liberty Financial USD, but continues to gain traction due to PayPal’s vast retail ecosystem and integration with its digital payments infrastructure.
Incidents like this won’t derail PYUSD’s long-term adoption, said Elena Choi, crypto market strategist at Kaiko Research. The response was quick, transparent, and ultimately reaffirmed Paxos’ operational reliability which is critical for building institutional trust.
As regulators tighten scrutiny on stablecoins, the PYUSD stablecoin case highlights both the benefits and vulnerabilities of blockchain-based financial instruments. For now, it remains a powerful example of how transparency and accountability can coexist even when human error briefly floods the market with an impossible sum.
