Scammers and degens have welcomed the launch of PayPal USD (PYUSD) with dozens of counterfeit “coins.” Data from DexTools, a DeFi tracking app, shows over 60 token pairs sporting the “PYUSD” ticker that cropped up post the stablecoin rollout. Fake tokens minted on various chains, including Ethereum, BNB Smart Chain, and Base, Coinbases’ newest layer-2, have flooded decentralized exchanges, such as Uniswap.
The blame for this uptick in scam activity partially falls on PayPal and Paxos. Both companies failed to include the official token address for PYUSD in their respective press releases. The big news came on Monday afternoon, as PayPal announced its new stablecoin designed for payments and “backed by secure and highly liquid assets.” The currency allows users to buy, sell, transfer, and hold their assets in PayPal’s app or on the company’s website.
PYUSD is pegged to the US dollar and issued by Paxos Trust, a New York-based financial institution and blockchain technology company supporting PayPal’s cryptocurrency operations since 2020. Paxos issued its own statement stressing that PYUSD is the first of its kind initiative, representing the next phase of US dollars on the blockchain.
The PYUSD sparked a bit of controversy due to the platform’s asset-freezing capabilities combined with PayPal’s history of meddling with user accounts. In a Twitter thread, one user pointed to functionalities in the code allowing to freeze an address balance from being transferred and wipe the balance of a frozen address.
Another user commented on PayPay’s practice of banning users for violating arbitrary standards and freezing funds “on a whim.”
Indeed, PayPal’s approach to customer relations may raise an eyebrow. Last year, the company threatened in a fine-printed policy statement that it would fine users $2,500 for spreading misinformation. Fortunately, the company quickly backtracked from what it called “confusion.”
