A major error in the stablecoin infrastructure of provider Paxos has caused a stir. The issuer reportedly minted 300 trillion US dollars worth of PayPal USD (PYUSD) by mistake - before the excess tokens were subsequently burned.
According to on-chain data, the PYUSD supply temporarily spiked to over 300 trillion USD. Within about 20 minutes, Paxos identified the error and destroyed all excess tokens, as reported by analytics firm Arkham. The incident has sparked discussions about technical safeguards and trust in regulated stablecoins.
Error leads to massive distortion of the PYUSD supply
During an internal transaction, Paxos apparently created 300 trillion PYUSD on the Ethereum blockchain. The entire excess supply was later removed in a so-called burn process - a mechanism that eliminates tokens from circulation.
Paxos emphasized in a statement that there was no external breach and that customer funds were never at risk. The underlying cause has been resolved.
At 3:12 PM EST, Paxos mistakenly minted excess PYUSD as part of an internal transfer. Paxos immediately identified the error and burned the excess PYUSD.
This was an internal technical error. There is no security breach. Customer funds are safe. We have addressed the root…
— Paxos (@Paxos) October 15, 2025
Limited impact
The incident highlights the sensitivity surrounding stablecoins, even those deemed “regulated.” A simplified mint/burn procedure can lead to extreme distortions within minutes - posing challenges for both trust and technical design.
Although no excess tokens remained in circulation, stricter audit mechanisms, multi-signature systems, or additional controls for mint and burn operations are now being discussed. The case will likely serve as an argument for policymakers and regulators to tighten oversight and standards for stablecoin issuers.
On-chain analyses from Etherscan show that the incident stemmed from a single transaction originating from the official Paxos Treasury address. The wallet first executed several large mint operations of roughly 60 trillion PYUSD each, before sending all tokens back to the same address and burning them. According to blockchain data, the entire process was completed in under 25 minutes. Paxos later confirmed it was an internal test process that had accidentally been conducted on the mainnet instead of the test environment as intended. The stablecoin PYUSD remains fully backed by US dollars and government securities, with a current circulating supply of around 230 million tokens. PayPal did not comment on the incident.
