Paxos targets controlled DeFi access with Fordefi deal

On Tuesday, stablecoin and blockchain infrastructure firm Paxos announced an agreement to acquire Fordefi, a New York-based startup that builds wallets for decentralized finance, in a transaction valued at more than $100 million. The company disclosed that the purchase is intended to add DeFi-focused wallet technology for clients that want to use decentralized applications with defined controls.

Full terms were not provided. Fordefi will continue to operate independently for now while Paxos works to integrate its technology into Paxos’s custody and settlement platform.

“We have customers that want to be able to access DeFi and have the right capacity to do that,” noted Charles Cascarilla, cofounder and CEO of Paxos. “We certainly hear it all the time,” he added, referring to client interest in broader DeFi access.

Founded in 2021, Fordefi focuses on wallets for institutional DeFi use. The startup has about 40 employees and serves roughly 300 clients. Its last funding round valued the company at $83 million, according to company and fundraising data.

Paxos is a major operator in stablecoins, or cryptocurrencies tied to assets such as the U.S. dollar. The firm issues PayPal USD, which has a market capitalization above $3.6 billion, and supports partners including PayPal and Nubank with crypto trading, settlement and custody. Paxos holds a New York trust charter.

DeFi refers to blockchain-based services such as lending and trading that run on smart contracts instead of centralized intermediaries. While the sector has offered around-the-clock access and high yields, protocols have faced hacks and exploits, leading some institutions to proceed carefully. Over the past year, large companies have begun limited tests, including tokenizing money-market funds and enabling DeFi-linked borrowing.

Paxos plans to use Fordefi’s wallet and policy tools to help clients transact with DeFi protocols under established risk and compliance standards.

The Fordefi acquisition is Paxos’s second recent deal. In February, Paxos completed the purchase of Membrane Finance, a stablecoin issuer in Finland. That transaction added a licensed European entity and helped align the firm with the European Union’s Markets in Crypto-Assets framework.

As we covered previously, Paxos publicly addressed an incident at a Federal Reserve roundtable where it mistakenly minted $300 trillion of PayPal USD (PYUSD) during a rare manual cold-minting process. The error, caused by a technical malfunction during an internal transfer, was detected within minutes; the excess tokens never left its system and were burned within 30 minutes. Aave temporarily froze the PYUSD market and the stablecoin briefly deviated from $1 before returning to parity. Paxos said it has strengthened internal controls and will add safeguards to prevent similar errors.