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Paxos Gold (PAXG) supply doesn’t match their Chainlink data feed or their latest attestation report *repost – see comments*

* Please note, this is a repost, reasoning at the bottom*

PAXG claims to be a gold-backed crypto token with each token representing one ounce of gold. That means tokens should **only be minted if there is underlying gold backing them.**

PAXG has a [Chainlink data feed](https://data.chain.link/paxg-reserves) that reports PAXG’s gold reserves and the feed indicates that it is **updated daily.**

PAXG also has monthly [“attestation” reports](https://www.paxos.com/attestations/) that they often release only >= 1 month after the report date. These reports are **useless** because the data is already outdated by the time they are released to the public. Even if the reports were released on the date of the report they provide little useful information. They only report the gross gold reserves in troy ounces as of that particular date and provide no information about the reserves before or after the report date. The attestation reports also like critical details such as bar location, weight, purity and refiner. The attestation reports even if taken at face value do not provide sufficient information to determine if PAXG was fully backed even as of a historical date.

The [Chainlink report](https://archive.is/2gl6N) currently shows:

60,161.14 troy ounces of gold reserves updated within the last 24 hours.

While PAXG has minted and shows on nearly every other [data provider](https://etherscan.io/token/0x45804880de22913dafe09f4980848ece6ecbaf78), a supply of **85,681.469 PAXG tokens!**

This is a discrepancy of **over** **25,500 ounces of gold (over $43,000,000 at the current market price)!**

PAXG also has a “[gold allocation lookup tool](https://www.paxos.com/paxgold/)” which provides detailed information about the gold bar(s) backing the tokens held by each and every Ethereum address that holds PAXG tokens.

Using their own tool to check the largest holder of PAXG tokens [0xe25a329d385f77df5d4ed56265babe2b99a5436e](https://etherscan.io/token/0x45804880de22913dafe09f4980848ece6ecbaf78?a=0xe25a329d385f77df5d4ed56265babe2b99a5436e) (17,424.73 tokens, 20.34% of the total supply worth >$30,000,000) shows **zero gold allocated** and it has been this way for a [**long time.**](https://cryptoresearch.report/crypto-research/discrepancies-identified-in-the-transparency-data-provided-by-pax-gold-and-tether-gold/)

What gives PAXG? **Are these tokens really backed by gold or not?** Where can the *detailed* information about each and *every* bar backing PAXG be found? Why is your Chainlink feed so different from your token supply?

Furthermore, buried within the fine print in [PAXG’s terms and conditions](https://www.paxos.com/pax-gold-terms-conditions/) is the right to issue additional unbacked tokens to account for “storage fees”.

*14.3. Storage Fees*

*The Company may charge storage fees to all token holders starting no sooner than August 1, 2020 by issuing to the Company new PAXG tokens, thereby diluting the value of existing PAXG tokens. The storage fee will be in line with industry practice, and such storage fee will be passed on to all PAXG token holders on a pro rata basis. The full methodology and exact timing of the storage fee will be disseminated at least thirty (30) days prior to the implementation of such storage fees.*

*The storage fees are an obligation of all PAXG token holders, regardless of whether such token holder is a Member. By purchasing PAXG tokens, you agree to assign the obligation to pay any and all storage fees tied to the PAXG tokens to subsequent holders of such PAXG tokens, and by receiving transfers of PAXG tokens, token holders agree to accept the assignment of such obligation.*

At any point since August 1, 2020 has PAXG issued unbacked tokens to account for storage fees? If so, how many? Where is the transparency and reporting around this if it has been implemented? In either case, surely this cannot account for a 20-30% discrepancy in the supply as noted above.

*Note: Since PAXG has a marketcap of over $100,000,000 and is trading on Binance, Kraken, FTX and Gemini, this is a significant issue.*

*This thread was originally removed due to mods responding to a comment by u/josl-l stating “A quick look at coingecko shows that the **circulating supply is 60,161** with a max supply of 84,150. Their data is correct, he is wrong, he should stop spreading misinformation.

”A note for u/josl-l and the Cryptocurrency mod team, circulating supply is a determination made by Coin Gecko and Coin Market Cap (read their policies.) They are clearly just taking the figure from Chainlink. It’s clear by looking at the blockchain there are more than 61,161.14 in circulation. There is no address holding 25,890.691 tokens that are locked up out of circulation. The top two unlabeled addresses hold only 23,532.86 tokens and the second one (0x52f5f2add61c835ff10550402a46621ebd1071d5) shows gold bars allocated to it. Furthermore, what could possibly be a legitimate reason to be continually minting new unbacked tokens making up nearly 30% of the total supply?



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9 Comments

  1. Thanks for sharing again, interesting read.

    TLDR of the major points from my understanding:

    PAXG have minted $43m worth of extra tokens and their biggest wallet + more addresses show no gold backing on their gold lookup tool.

  2. This is some great investigative work OP. A big part of crypto is the “trustless” aspect of a blockchain that allows people to interact and transact without going through trusted centralized institutions. But as Vitalik Buterin recently said, there’s always a level of trust in any interaction and it’s more about giving people more information and control so they can make a reasoned decision on how much trust they want to imbue in any specific case. Paxos obviously hasn’t been completely forthcoming or honest about their gold stores, and luckily we’re able to get information like this to question them and the veracity of their claims.

    This serves both as an example of how crypto can help empower people through knowledge (traditional institutions are so opaque that in many instances we would never know until it all collapsed) and also a reminder that we’re still in the Wild West days of crypto where there’s tons of dishonest actors trying to get a leg up. Good work OP.

  3. Surprising that given that Paxos seems to be used by US regulated institutions.

    Regarding trustless-ness, i think this is a good example of issues with blockchain assets with a centralized entity behind it.

  4. It almost sounds as if they are minting the coins in advance and use that to actually buy the gold to “back” their own coins..

    Excellent writeup. Let’s hope it doesn’t get removed this time..

  5. This really shocks me. Paxos is considered so reliable that even PayPal is partnering with them to handle all their crypto transactions, and for one of their biggest tokens to report numbers not matching their block chains is deeply concerning.

    I was hoping to start buying gold later this year via PAXG instead of traditional gold EFTs. Now I’m not so sure.

  6. There is a circulating supply of 60,161; the rest is minted and locked in contracts for a maximum supply of 87,290. Obviously when you look at the contract addresses, the non circulating tokens are not backed because they are not circulating and don’t need to be.

    I’m really not sure where you are trying to go with this, because the circulating supply is backed. The address you mentioned is clearly a contract with non circulating tokens, obviously they are not going to be backed.

    So yes you are spreading misinformation. Your entire argument is based on a contract address and non circulating tokens not being backed.

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