In an extraordinary attempt at damage control, Paxos CEO Charles Cascarilla sought to reframe his company's accidental minting of $300 trillion worth of PayPal's PYUSD stablecoin as evidence of blockchain technology's inherent transparency rather than a catastrophic operational failure.
Speaking at the Federal Reserve's first-ever crypto payments conference on Tuesday, Cascarilla told industry leaders and regulators that the October 15 incident demonstrated exactly why distributed ledger technology deserves a central role in the future of finance.
"It underscores the value of the blockchain. It actually shows the transparency that you can immediately have into what's going on," Cascarilla said during the stablecoin panel discussion, which also featured executives from Circle, Fifth Third Bank, and DolarApp.
The error, which briefly created a sum more than 2.5 times the entire global GDP of approximately $117 trillion, occurred when Paxos mistakenly minted 300 trillion PYUSD tokens on the Ethereum blockchain at 3:12 PM EST. The company identified and burned the excess tokens within 22 minutes by sending them to an inaccessible address.
According to blockchain data from Etherscan, the erroneous mint originated from a Paxos hot wallet and was directed to PayPal's PYUSD smart contract. Remarkably, the entire $300 trillion minting and burning operation cost just $2.66 in gas fees to execute on Ethereum.
Manual Process Failure Behind Historic Error
Cascarilla acknowledged full responsibility for the blunder, attributing it to rarely-used manual operational processes designed for secure "cold minting" operations. "The mistake was entirely ours. Certainly, we didn't operate at the standards that we expect of ourselves," the executive said at the Fed conference.
The CEO explained that the manual processes were "put into place for a deliberate reason in terms of being able to create very secure cold minting processes, but it's something that we rarely use." The company knew about the error "within a minute or two" and confirmed the tokens never left its internal systems.
Bitcoin.com CEO Corbin Fraser quipped on X: "A long way to say we forgot to use the Eth to gwei calculator," referring to the decimal conversion tool used to calculate Ethereum transactions.
Industry observers quickly noted that the two previous PYUSD transactions made by Paxos just hours before the error were both for 300 million PYUSD, suggesting a likely decimal point mistake that inflated the amount by one million times.
Banking Charter Bid Under Scrutiny
The timing of the incident couldn't be worse for Paxos. The New York-based blockchain infrastructure company is currently seeking a national trust charter from the Office of the Comptroller of the Currency under the recently-passed GENIUS Act framework.
Paxos joins stablecoin rivals Circle and Ripple in applying for federal banking authority, marking an intensifying race among digital asset firms for national regulatory status. This represents Paxos's second attempt at securing such a charter — the company previously gained conditional OCC approval in 2021, but that application expired in 2023.
"If someone with a fat finger error can increase the total supply of a stablecoin by a factor of 120,000, then perhaps regulators should proceed cautiously with granting that firm with a national bank charter and keys to the payment system," Amanda Fischer, Policy Director at Better Markets and former Chief of Staff to ex-SEC Chair Gary Gensler, told Decrypt.
The New York Department of Financial Services confirmed it is in contact with both Paxos and PayPal regarding the incident, adding another layer of regulatory scrutiny to the company's operations.
Industry Divided on Transparency Defense
While Cascarilla emphasized blockchain's transparency benefits, industry reactions have been mixed. Daniel Liu, CEO of Republic Technologies, told Decrypt that transparency was "definitely a strength" of blockchain networks.
"When incidents like this occur on-chain, it's easy for both people and machines to identify them and immediately alert the relevant parties to take action," Liu said. "This is far better than waiting for a company to handle such issues privately and disclose them to the public only after the fact."
Liu predicted the incident would cause "only short-term reputational damage," noting that similar "fat finger" events occur in traditional finance as well. "Given that there were no real losses, they should be able to recover from this quickly," he added.
However, Martin Köppelmann, founder and CEO of crypto wallet Gnosis, expressed deeper concern: "Certainly not a good look to get the decimals wrong when minting stables and not having procedures in place to catch that early."
The incident briefly disrupted decentralized finance markets, with Aave temporarily freezing PYUSD markets as a precautionary measure following what Chaos Labs founder Omer Goldberg called an "unexpected high-magnitude transaction."
GENIUS Act Reshapes Stablecoin Landscape
The error occurred against the backdrop of sweeping regulatory changes in the stablecoin sector. President Donald Trump signed the GENIUS Act into law on July 18, 2025, establishing the first comprehensive federal regulatory framework for payment stablecoins in the United States.
The legislation, which passed the Senate 68-30 and the House 308-122, requires stablecoin issuers to maintain 100% reserve backing with liquid assets like U.S. dollars or short-term Treasuries. Issuers must also make monthly public disclosures of reserve composition and comply with strict anti-money laundering requirements.
Under the GENIUS Act, stablecoin issuers can obtain federal licenses through the OCC or operate under state trust charters that meet equivalent standards. The legislation explicitly exempts payment stablecoins from being classified as securities under federal law, providing regulatory clarity that has long been sought by the industry.
Comptroller of the Currency Jonathan V. Gould praised the GENIUS Act, stating it "will transform the financial services industry" and that the OCC is "prepared to work swiftly to implement this landmark legislation."
Stablecoin Market Reaches New Heights
Despite Paxos's mishap, the broader stablecoin market continues its remarkable growth trajectory. Total stablecoin market capitalization currently hovers around $308 billion, up from approximately $205 billion at the start of 2025.
Users of prediction market Myriad Markets forecast the total market cap will surpass $360 billion by February 2026, reflecting growing institutional and retail adoption of dollar-backed digital assets.
PYUSD, Paxos's partnership token with PayPal, currently ranks as the sixth or seventh-largest stablecoin with a market capitalization hovering between $2.6 billion and $2.7 billion, depending on the source. The token has grown significantly since launching in 2023, though it remains far behind market leaders Tether's USDT ($181 billion) and Circle's USDC ($76 billion).
Cascarilla stressed during his Fed remarks that while transparency is valuable, the industry must continue improving safeguards. "There's still more we can do," he said, calling the episode "a reminder that crypto, like traditional finance, needs robust safeguards to contain and control incidents."
The Paxos CEO also emphasized that widespread adoption of stablecoins and decentralized finance will require further simplification. "DeFi and crypto are still not abstracted away enough where it's solving just the problem, as opposed to requiring you to actually understand the underlying mechanics," he said, comparing the current state of crypto to the early days of dial-up internet.
As federal regulators evaluate Paxos's application for a national trust charter alongside similar bids from Circle and Ripple, the $300 trillion minting error serves as a stark reminder of the operational risks that persist even among regulated, institutional-grade crypto firms. Whether transparency alone can offset concerns about process failures remains to be seen as the OCC conducts its thorough review process.
The incident has reignited debate about whether the rapid institutionalization of stablecoins is moving faster than the industry's operational maturity can safely support — a question that will likely influence not only Paxos's charter application but the broader regulatory approach to digital assets in the months ahead.