You can see the Paypal logo next to the cryptocurrency coins on your smartphone.
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PayPal’s blockchain partner Paxos on Wednesday incorrectly minted $300 trillion of the online payments giant’s stablecoin in what it called a “technical error.”
Market observers have discovered a large injection of PayPal’s PYUSD stablecoin into EtherScan, a block explorer and analytics platform for the Ethereum blockchain.
Paxos erroneously minted stablecoins as part of an internal transfer, then “immediately identified the error and burned the excess PYUSD,” the company said in a statement on social media.
“This was an internal technical error. There was no security breach. Customer funds are safe. We have addressed the root cause,” it added. PayPal did not respond to inquiries from CNBC outside of normal business hours.
Transactions on Etherscan show that the mistake was corrected after about 20 minutes.
PYUSD is touted as a dollar-pegged stablecoin that is fully backed by U.S. dollar deposits, U.S. government bonds, and similar cash equivalents. Therefore, PayPal states that tokens will always be redeemable for USD on a 1:1 basis.
However, this technical error highlights that the dollar peg is not inherently tied to the minting of stablecoins, but rather is guaranteed by PayPal and its independent third-party verification report.
There are not enough dollars in the world’s circulating currencies to back the $300 trillion PYUSD. Theoretically, it would require more than twice the world’s estimated total GDP.
Paxos’ mistake comes at a time when stablecoins are becoming mainstream, being adopted by a growing number of banks and payment platforms.
According to data from CoinMarketCap, PYUSD is currently the sixth largest stablecoin in the world, with a market capitalization of over $2.6 billion.
