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Paxos Trust Company must pay $26.5 million in penalties in New York for systemically breaching anti-money laundering requirements and failing to vet and monitor a former partner, Binance, the Department of Financial Services, also known as DFS, disclosed Monday.

In 2018, three years after obtaining a limited-purpose trust charter in New York, Paxos paired with Binance, the world’s largest exchange, to list PAX, a U.S. dollar-back stablecoin, then partnered with the platform again in 2019 to distribute a second stablecoin, Binance USD, without conducting sufficient due diligence first or monitoring transactions afterwards.

“Paxos did not have appropriate controls in place to effectively monitor for significant illicit activity occurring at or through Binance, and failed to escalate red flags to Paxos’s senior management and its board,” DFS alleged Monday. “Notably, Binance’s lax geofencing restrictions enabled U.S. users to access an unregulated exchange.”