Paxos Standard Terms and Conditions
The Paxos Standard Terms and Conditions (hereinafter “PAX Agreement” or “PAX Terms and Conditions”) constitute an addendum to the General Terms and Conditions for the provisions of and use of the US dollar denominated and backed stablecoin managed by Paxos known as Paxos Standard tokens (“PAX”). These terms apply to each electronic form or contract executed by users and/or members who use PAX, unless expressly stipulated otherwise in the Paxos Contractual Documentation. To the extent there is a conflict between the PAX Agreement and the General Terms and Conditions, the terms of this PAX Agreement shall govern and control. Capitalized terms not otherwise defined herein shall have the meaning ascribed to them in the General Terms and Conditions.
- PRELIMINARY PROVISIONS
- 1. Terms and Conditions
- 1.1. You must agree to all of the terms of this PAX Agreement. If you do not agree to or accept all of the terms of this PAX Agreement, please immediately discontinue access to, and use of, all Paxos services and products. This PAX Agreement applies to all users and/or customers of the PAX, whether as a guest or a registered Member.
- 1.2. By agreeing to the PAX Terms and Conditions, you agree to be bound by the General Terms and Conditions and the rest of the Paxos Contractual Documentation, as applicable.
- 1.3. If you are under the age of eighteen (18) or the legal age for entering legally binding contracts under applicable laws, you are not permitted to use any of Paxos services and products. By continuing to access or use the Site, you indicate that you are (18) years of age or older or have the legal capacity to enter legally binding contracts under applicable laws. Misrepresentation of your age to gain access to the any of Paxos services and products is a breach of this Agreement.
- 2. Definitions
- 1. Terms and Conditions
“Account” means a Member’s account with Paxos.
“Platform” means the online software platform operated by Paxos for the issuance and redemption of PAX.
- DISCLAIMER; RISK FACTORS
- 1. The Ethereum blockchain may experience backlogs, higher than normal transaction fees, changes to the network, failure or a fork in the protocol. We do not own or control the Ethereum blockchain and are not responsible for the operation of the Ethereum network and make no guarantees regarding the network’s security, functionality, or availability.
- 2. Because PAX is a ERC20 token, it may be compatible with software or other technology provided by third-party. The Company does not guarantee the security or functionality of any third-party software or technology and is not responsible for any losses of PAX due to the failure of third-party software or technology.
- 3. Please also review the General Terms and Conditions for additional risk factors.
- THE PLATFORM
The Platform is an online platform that allows Members to acquire PAX from the Company for US dollars and redeem PAX from the Company for US dollars.
- 1. PAX tokens are not money or legal tender and are not monetary instruments. Once you have PAX tokens, you can transfer them, trade them, keep them, use them to pay persons that will accept PAX, or redeem them for US dollars from the Company, subject to the limitations below.
- 2. PAX tokens are fully backed by US dollars held by Paxos Trust Company, LLC in deposit accounts with US banks or by US Treasury bonds, as further described in Section 5 below. The US dollars used to purchase PAX are deposited either in US insured depository banks or used to purchase U.S. Treasury bonds, as described below, to maintain a one-to-one ratio of PAX to the amount of US dollar deposits or the face amount of US Treasury bonds. For example, if you purchase five PAX with five US dollars, Paxos Trust Company will hold those five US dollars in a bank account or in US Treasury bonds to support the five PAX in circulation.
- 3. PAX is an ERC20 token on the Ethereum public blockchain. Because of this, PAX may be compatible with existing third-party software that supports ERC20 tokens.
- 4. Only verified Members may purchase PAX from us or redeem PAX from us. We may also refuse to issue PAX to, or redeem PAX from, a verified Member in the event of any of any of the circumstances described in Section 5.1 of this Agreement, including, without limitation, where we believe that the issuance or redemption of PAX would be contrary to applicable law or would otherwise expose us to legal liability. Absent a reasonable justification not to redeem PAX, and provided that you are a fully verified Member of the Company, your PAX are freely redeemable, subject to the redemption minimums described herein.
- FDIC COVERAGE AND SWEEPS
- 1. Overview of Cash Backing PAX
Paxos Trust Company provides cash management for the US dollar deposits backing PAX so that each PAX is backed by an equivalent amount of US dollar deposits or US Treasury bonds. To achieve this, the US dollar deposits backing PAX are (i) held at US depository institutions, which include US depository institutions to which cash is swept pursuant to a certain deposit placement agreement, or (ii) invested in U.S. Treasury bonds. Paxos Trust Company may modify its cash management program from time to time, provided that the US dollars will always be held in regulated US financial institutions or invested in either US Treasury bonds or products fully collateralized by US Treasury bonds held in segregated accounts.
- 2. Deposit Accounts
Each depository account is (i) in our name and under our control, (ii) separate from our business and operating bank accounts, and (iii) established specifically for the benefit of Paxos Members. The primary depository account is protected by FDIC insurance up to $250,000 for each account ownership category. However, since this is a large volume account with balances exceeding this deposit insurance limit, Paxos Trust Company uses a “sweep” to transfer a portion of the funds from the primary depository account to multiple other FDIC-insured US banks. The primary deposit account may, however, still retain balances in excess of the FDIC insurance limit to the extent necessary to maintain liquidity.
- 3. Treasury Bond Program
In addition to the sweep described above, US dollars backing PAX may be invested in US Treasury bonds, including through direct purchases of US Treasury bonds by Paxos or in connection with overnight reverse repurchase agreements that are collateralized by US Treasury bonds.
- 4. Pass-Through Insurance Option
You may elect to “opt in” to obtain FDIC “pass-through” deposit insurance that separately insures you up to the applicable FDIC deposit insurance limits. If you complete the Opt-In registration and comply with all other terms and conditions, Paxos agrees to maintain your funds in a custodial account and to maintain records showing your interest in the deposits in the custodial account. Assuming the foregoing conditions are met, the FDIC should provide pass-through deposit insurance coverage on deposits in the custodial account in an amount corresponding to your funds in this custodial account so long as you can prove that these funds are owned by you in a manner satisfactory to the FDIC. We have provided the Opt-in registration so that we can maintain the records required to confirm your identity and ownership interest in the deposits in the custodial account in a manner reasonably designed to satisfy the FDIC’s requirements for obtaining pass-through deposit insurance coverage. Your verification of your ownership of the PAX and the equivalent balance of funds in the custodial account is essential.
If we are unable to verify your ownership of the PAX, either because you hold the PAX in an omnibus account with others (such as at an exchange) or otherwise, we will not be able to provide you this Opt-In registration. Once you transfer the PAX from the wallet(s) identified to us during the Opt-In registration to another wallet (even if owned by you), Paxos is not responsible for taking any action to make FDIC insurance available on a pass-through basis for the funds backing that PAX and makes no representations about the availability of FDIC insurance for such funds.
IF YOU DO NOT OPT IN AND YOU HAVE ACQUIRED THE PAX FROM A PERSON OTHER THAN PAXOS, “PASS-THROUGH” DEPOSIT INSURANCE WILL NOT BE AVAILABLE TO YOU ON DEPOSITS BACKING YOUR PAX.
For more information on this option, please reach out to email@example.com.
- FUNDING YOUR ACCOUNT
After creating your Account with the Company, you will be able to fund your Account with US dollars.
- 1. You may fund your Account with US dollars transferred from your account(s) with financial institutions. Once we receive your funds and validate that they are from a bank account owned by you, we will credit your Account with those funds. If a US dollar deposit does not originate from a bank account owned by you, it will be rejected and returned immediately. US dollar deposits sent before 3 p.m. will typically be credited to your Account on the same day or next business day. US dollar deposits may not be credited outside of normal banking hours. Transfer times are subject to bank holidays, the internal processes and jurisdiction of your bank, and the internal processes of our banks.
- 2. You represent and warrant that all funds that you transfer to us do not represent the proceeds of any criminal or fraudulent activity. You are not allowed to receive funds in your Account from a sender other than yourself. If we reasonably determine that you are not the owner of the funds in your Account, we reserve the right to dispose of those funds in accordance with applicable law and in our sole discretion, which may include returning the funds to the originator or to a charity of our choosing.
- PURCHASING PAX
- 1. After your Account has been funded, you may begin to purchase PAX with US dollars on a one-for-one basis, subject to the minimum conversion amount below. In order to receive PAX, you must provide us with your Ethereum public address.
- 2. Prior to the placement of a purchase order on our Platform, you will be required to review the following information: the amount of the purchase, the commission (if any) to be charged by the Platform, and the Ethereum address to which the PAX will be sent. For more detailed instructions on how to be issued PAX, please refer to [https://standard.paxos.com/PAX/help.]
- 3. Once an issuance of PAX has been executed and the appropriate assets have been credited and debited, the transaction may not be reversible.
- 4. The Company requires a minimum conversion amount of $1,000, which may be updated from time to time.
- 5. Once a purchase request has passed Compliance checks, it will be processed according to the conversion schedule  here.
- 6. The Company may require a minimum amount for withdrawal, which may be updated from time to time.
- CANCELLED ORDERS
The Company reserves the right to cancel or nullify orders in the event that the order contains a bug, mistake, or an actual or suspected breach of this Agreement.
- CONVERSION FROM PAX TO US DOLLARS
- 1. In order to redeem PAX for US dollars through the Platform, you must have an Account. Your Account will have a unique redemption address to which you can send your PAX. Upon sending your PAX to your redemption address, the Company will credit your Account a corresponding amount of US dollars. For example, if you send 5 PAX to the identified redemption address, the Company will credit your Account with 5 US dollars. ALL REDEMPTIONS WILL BE ON A ONE-FOR-ONE BASIS, NOTWITHSTANDING ANY CHANGE IN THE MARKET VALUE OF PAX.
- 2. All PAX will be rounded down to the nearest US cent at conversion.
- 3. The Company will make commercially reasonable efforts to redeem your PAX quickly. It may take up to 1 business day for your Account balance to reflect the redemption. Once a conversion request has passed Compliance checks, it will be processed according to the conversion schedule https://standard.paxos.com/PAX/help here.
- WITHDRAWING US DOLLARS
- 1. Members may withdraw some or all of their US dollars from their Accounts at any time, upon request to us. US dollars will be transferred from the Member’s Account with the Platform to the bank account designated by, and owned by, the Member.
- 2. Please note that any withdrawal of US dollars may be delayed as necessary to comply with applicable law and/or the Platform’s Compliance Program, including verification of customer identification and anti-money laundering procedures. Withdrawals may take up to two (2) days to complete, provided that larger withdrawals may take substantially longer to complete.
- 1. You understand, acknowledge and agree that the underlying operating rules of the Ethereum blockchain may change from time to time in such a way as to result in more than one related version of Ethereum (each instance of any such change, a “Fork”). If a Fork occurs, it will result in the creation of a new branch of the Ethereum blockchain. The Company will evaluate all forks and make a determination, based on a number of factors, to support PAX on one, and only one, of the Forks. The Company will continue to provide Services for, support and hold US dollars against, PAX held on the supported Fork only.
- 2. If a Fork occurs, you understand, acknowledge and agree that we may temporarily suspend the operations of the Platform
- FREEZES AND UPGRADES
As part of the ERC20 smart contract and as part of the Services, the Company has the ability and the right to freeze and upgrade all PAX tokens (on an aggregate basis), regardless of where the PAX is being held. The Company will make commercially reasonable efforts to provide prior notice of any freeze or upgrade and inform holders of PAX of the reasons and consequences of the freeze and/or upgrade. The Company will make commercially reasonable efforts to use the freeze and/or upgrade feature only under limited circumstances.
- 1. Fees on Issuance and Redemption
An overview of our fees on issuance and redemption is set forth at https://standard.paxos.com/PAX/help.
- 2. Banking Fees
The Company will not charge you fees for redeeming PAX or withdrawing US dollars from the Platform. Your financial institution and/or the provider of your crypto-asset wallet, however, may charge transaction and other fees related to the transfer of funds to your Account.
- 3. Additional Fees for Certain Accounts
Due to the cost of maintaining and supporting your Account and subject to applicable law, you will incur a monthly charge of two US dollars (US $2.00) if you maintain a non-zero balance and there has been no issuance or redemption activity on the Account for twelve months or longer. Such fee will be auto-debited from your account on a monthly basis in US dollars.
- 4. Right to Change Fees and Fee Structure
We reserve the right to change or modify our fee structure or increase any of our fees at any time and from time to time. Any such changes, modifications or increases will be effective upon posting such changes, modifications or increases on our Site. Your first use of your Account following the posting on the Site of any changes to the fees will constitute your acceptance of such changes. If you do not agree to the posted changes, you may close your Account as provided in this Agreement.
- ILLEGAL USE OF PAX
WE MAY FREEZE, TEMPORARILY OR PERMANENTLY, YOUR USE OF, AND ACCESS TO, PAX OR THE US DOLLARS BACKING YOUR PAX, WITH OR WITHOUT ADVANCE NOTICE, IF WE ARE REQUIRED TO DO SO BY LAW, INCLUDING BY COURT ORDER OR OTHER LEGAL PROCESS.
YOUR PAX AND THE US DOLLARS BACKING YOUR PAX MAY BE SUBJECT TO SEIZURE OR FORFEITURE BY LAW ENFORCEMENT, AND WE WILL COMPLY WITH LEGAL PROCESS IN RESPECT THEREOF.
IF WE DETERMINE AFTER INVESTIGATION THAT PAX HAS BEEN USED, OR IS BEING USED, FOR ILLEGAL (OR SANCTIONED) ACTIVITY, WE MAY NOT PERMIT YOU TO REDEEM YOUR PAX FOR US DOLLARS FROM PAXOS, AND, IF PRESENTED FOR REDEMPTION, SUCH PAX AND THE US DOLLARS BACKING SUCH PAX MAY BE FORFEITED.
ANY PAX OR FIAT CURRENCY UNDERLYING PAX THAT IS SUBJECT TO FREEZE, SEIZURE, FORFEITURE OR SIMILAR LIMITATION ON ITS USE IMPOSED BY LAW MAY BECOME WHOLLY AND PERMANENTLY UNRECOVERABLE AND UNUSABLE, AND IN APPROPRIATE CIRCUMSTANCES, MAY BE DESTROYED.
THIS SECTION APPLIES TO ALL HOLDERS, REGARDLESS OF WHETHER THE HOLDER IS A MEMBER OF PAXOS.
BY USING PAX, YOU AGREE THAT WE MAY TAKE THE ACTIONS SET FORTH IN THIS SECTION AND THAT WE WILL NOT BE LIABLE TO YOU THEREFORE.