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A technical malfunction caused Paxos to accidentally mint $300 trillion worth of PYUSD stablecoin on Wednesday afternoon, a sum dwarfing the global GDP before the blockchain infrastructure firm burned all errant tokens within minutes. Paxos says no customer funds were at risk and that the incident stemmed from an internal error, not a security breach.
The incident occurred at 3:12 p.m. ET, when a malfunction in Paxos’ internal minting system triggered the creation of excess PYUSD stablecoin tokens. Within moments, the blockchain infrastructure company identified the anomaly and burned all improperly generated tokens to restore the correct supply balance.
“This was an internal technical error. There is no security breach. Customer funds are safe. We have addressed the root cause,” — Paxos, in a public post on X, October 15, 2025.
Paxos confirmed that it had identified and corrected the fault, resuming normal operations shortly after the event. Blockchain explorer Etherscan verified that the over-minted PYUSD tokens originated from a Paxos hot wallet and were later destroyed.
The firm reiterated that no external interference occurred during the glitch and emphasized that the problem was strictly internal. “There was no security breach, and customer assets were never at risk,” Paxos said in its official statement.
According to Paxos’ report, the erroneous minting took place during an internal transfer process involving the PYUSD stablecoin, which is backed by PayPal and issued by Paxos Trust Company. The unexpected creation of 300 trillion tokens briefly appeared on the Ethereum blockchain, prompting immediate scrutiny from crypto watchers.
The affected transaction was traced to a Paxos-controlled hot wallet that sent the excess tokens to PayPal’s PYUSD smart contract. Once detected, Paxos initiated a burn transaction to remove the surplus from circulation, ensuring that the PYUSD stablecoin supply returned to its proper level.
Etherscan’s records confirm the burn and subsequent normalization of token balances. The incident underscores the precision required in automated minting systems that underpin stablecoin operations.
Despite the extraordinary figure involved, the swift response prevented broader market panic. Paxos later said that the internal error was fully contained and that its PYUSD stablecoin infrastructure has since been stabilized and audited.
The technical glitch briefly rippled across the decentralized finance (DeFi) ecosystem, where PYUSD stablecoin is actively used for lending and trading. Major protocol Aave temporarily paused its PYUSD markets after detecting the sudden spike in supply, a precautionary measure to avoid unintended liquidations or lending imbalances.
During the event, the PYUSD stablecoin briefly dipped below its $1 peg as automated systems adjusted to the inflated token count. However, after Paxos burned the excess supply, the token quickly regained stability.
Market observers noted that Paxos’ rapid response helped prevent a potential chain reaction across Ethereum-based liquidity pools. Within hours, PYUSD trading volumes and prices normalized, with no long-term market distortion.
The company’s transparency and swift corrective actions appear to have maintained investor trust. Despite the glitch, confidence in the PYUSD stablecoin remained strong, and Paxos resumed its routine minting schedule, including a separate issuance of 300 million tokens aligned with its operational roadmap.
Following the resolution of the incident, Paxos confirmed that it has restored full operational integrity and resumed all PYUSD stablecoin activities. The firm reiterated its commitment to strong internal controls, regular audits, and transparent communication with users.
The PYUSD stablecoin, which currently holds a market capitalization of $2.6 billion, ranks as the sixth-largest stablecoin globally. Paxos continues to manage its issuance and compliance under U.S. regulatory oversight.
The company emphasized its focus on system resilience and accountability to ensure that similar events do not recur. By promptly burning the excess tokens and maintaining full transparency, Paxos sought to reinforce confidence in both its operations and the broader stablecoin ecosystem.
With stablecoins increasingly forming the backbone of decentralized finance, the PYUSD stablecoin incident serves as a reminder of the critical importance of robust technological safeguards — and the necessity of quick, transparent action when systems falter.
