Last Modified: October 18, 2024

The PAX Gold Terms and Conditions (hereinafter “PAXG Agreement” or “PAXG Terms and Conditions”) constitute an addendum to the General Terms and Conditions for the provisions of and use of the gold denominated and backed token managed by Paxos known as PAX Gold (“PAXG”). These terms apply to each electronic form or contract executed by users and/or Customers who use PAXG, unless expressly stipulated otherwise in the Paxos Contractual Documentation. To the extent there is a conflict between the PAXG Agreement and the General Terms and Conditions, the terms of this PAXG Agreement shall govern and control with respect to your use of PAXG. Capitalized terms not otherwise defined herein shall have the meaning ascribed to them in the General Terms and Conditions.

1. Definitions

“Allocated Gold” means a specific gold bar held in an LBMA-approved security carrier vault, identifiable by a unique serial number, weighting and purity percentage. 

“LBMA” means the London Bullion Market Association. 

“Loco London” means gold bullion that is physically held in London as defined by the LBMA. 

“London Good Delivery” has the meaning ascribed to it by the LBMA, as may be updated from time to time. 

“Unallocated Gold” means gold deposits held by an LBMA approved institution, which is a liability of such institution whereby the holder of unallocated gold owns a claim to an equivalent balance of gold. 

2. Disclaimer; Risk Factors

2.1 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. 

2.2 Because PAXG is an ERC20 token, it may be compatible with software or other technology provided by third parties. Paxos does not guarantee the security or functionality of any third-party software or technology and is not responsible for any losses of PAXG due to the failure of third-party software or technology.

2.3 The value of PAXG tokens relies substantially on the value of London Good Delivery gold. The price of London Good Delivery gold does fluctuate against currency and may result in a loss against currency. 

2.4 PAXG tokens may be sold at a discount to certain Customers for market making purposes. Certain market makers and other market participants may receive incentives to purchase PAXG tokens. 

2.5 Please also review the General Terms and Conditions for additional risk factors, including regarding the risks of loss associated with any crypto asset.

3. The Paxos Platform 

Subject to the terms of the Paxos Contractual Documentation, the Paxos Platform is an online platform that allows Customers to convert US dollars or Unallocated Gold for PAXG and convert PAXG for US dollars, Unallocated Gold, and Allocated Gold.  

4. PAXG

4.1 PAXG tokens are not money or legal tender and are not monetary instruments. Once you have PAXG tokens, you can transfer them, trade them, keep them, use them to pay persons that will accept PAXG, or convert them for US dollars, Unallocated Gold and Allocated Gold with Paxos, subject to the limitations below. 

4.2 Each PAXG token is equal to one fine troy ounce of London Good Delivery gold.

4.3 PAXG tokens represent fractional ownership of London Good Delivery gold bars, which are held by Paxos Trust on a segregated basis for the benefit of PAXG holders within LBMA-approved security carrier vaults.

4.4 The US dollars used to purchase PAXG are promptly converted into an equivalent amount of London Good Delivery gold, as described below, to maintain a one-to-one ratio of PAXG to the amount of London Good Delivery Allocated Gold bars. For example, if you purchase five PAXG, Paxos Trust Company will hold in custody an additional five troy ounces of London Good Delivery Allocated Gold for your benefit.

4.5 Paxos Trust issues PAXG pursuant to specific approval from the New York Department of Financial Services (the “NYDFS”). 

4.6 PAXG is available on the Trading Platform for trading, for custody with Paxos, and for withdrawal. PAXG was approved for Customers of Paxos Trust through specific approval from the NYDFS. Restrictions may apply in accordance with applicable law. 

4.7 Paxos Global serves as a reseller of PAXG.

4.8 PAXG is an ERC20 token on the Ethereum public blockchain. Because of this, PAXG may be compatible with existing third-party software that supports ERC20 tokens. 

4.9 In order to facilitate processing and to hedge against price risk, you may be purchasing PAXG tokens that are owned by Paxos. PAXG tokens owned by Paxos, like all PAXG tokens, represent ownership of Allocated Gold and will be sold at market rate. Upon your purchase of PAXG tokens, whether those tokens were previously owned by Paxos or otherwise, you will become the beneficial owner of those tokens and the underlying allocated gold.

4.10 Paxos may, at its sole discretion, engage market makers to provide liquidity for PAXG markets, both on the Trading Platform and on third-party platforms.

4.11 Only verified Customers may purchase PAXG from us or convert or redeem PAXG from us.  We may also refuse to issue PAXG to, or convert or redeem PAXG from, a verified Customers in the event of any circumstances in violation of the Paxos Contractual Documentation, including, without limitation, where we believe that the issuance or redemption of PAXG would be contrary to applicable law or would otherwise expose us to legal liability. Absent a reasonable justification not to convert or redeem PAXG, and provided that you are a fully verified Customers of Paxos, your PAXG are freely convertible, subject to the conversion requirements described herein.

5. Ownership and Allocation 

5.1 Your PAXG tokens are akin to a warehouse receipt representing your beneficial ownership of a pro rata portion of Allocated Gold. This means that you, the token holder, hold all of the economic value of the gold represented by your tokens, and all of the risk and reward related to ownership of that gold.

5.2 You will be able to view the serial number, purity, and gross weight of the London Good Delivery gold bars represented by the PAXG tokens held in your public Ethereum address on the Paxos public website at www.paxos.com/PAXGold. Paxosmay reallocate your PAXG tokens to different bars from time to time, in order to take into account transfers of PAXG tokens, new conversions of PAXG tokens, redemptions, and other PAXG transactional activity. This reallocation process will be automated and instantaneous, such that all PAXG tokens will be allocated to specific gold bars at all times.

5.3 Paxos will make commercially reasonable efforts to allocate your PAXG tokens to the fewest number of gold bars possible, and there may be a reallocation to consolidate your (and others’) PAXG tokens to the fewest number of bars on a frequent basis. In the event you are not allocated ownership of a full gold bar, you will own a pro rata share of that bar as determined by your PAXG token holdings. 

6. Funding Your Account with US Dollars

6.1 After creating your Account with Paxos, you will be able to fund your Account with US dollars. 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.

6.2 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, unless you receive specific prior approval otherwise from us. 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.

7. Funding Your Account with PAXG

7.1 To fund the Account with PAXG, you may transfer PAXG from your account(s) with a third-party crypto asset provider(s) into your Account operated by Paxos to your PAXG deposit address. 

7.2 You represent and warrant that all PAXG that you transfer to us do not represent the proceeds of any criminal or fraudulent activity. You are not allowed to receive PAXG in your Account from a sender other than yourself, unless you receive specific prior approval otherwise from us. If we reasonably determine that you are not the owner of the PAXG in your Account, we reserve the right to dispose of those PAXG in accordance with applicable law and in our sole discretion, which may include returning the PAXG to the originator or to a charity of our choosing.

8. Purchasing PAXG

8.1 After your Account has been funded, you may begin the process to convert US dollars into PAXG, as follows:

(a) You will be shown a streaming price quote for the price of one troy ounce of London Good Delivery gold (the “Streaming Price Quote”). The Streaming Price Quote is only valid for five (5) seconds. Prior to your decision to convert, you will be shown an estimate of the conversion price for PAXG tokens. 

(b) Prior to the placement of a purchase order on the Paxos Platform, you will be required to review the following information: the amount of the purchase, the commission (if any) to be charged by the Paxos Platform, and the Ethereum address to which the PAXG will be sent. You will also be shown an updated Streaming Price Quote.

(c) You will have five (5) seconds to review and submit your purchase order. If your Streaming Price Quote expires, you must obtain a new price quote.

(d) During periods of extreme volatility and at Paxos’s sole discretion, the Streaming Price Quote may update faster than every five (5) seconds. 

(e) Once an issuance of PAXG has been executed and the appropriate assets have been credited and debited, the transaction may not be reversible.

(f) Paxos may require a minimum amount for conversion, which may be updated from time to time. 

(g) Once a purchase request has passed Paxos’s compliance checks, it will be processed according to the conversion schedule as set forth in the Paxos User Guide, available at https://help.paxos.com. Provided a purchase request was made by 5:00 p.m. New York time and has passed the necessary compliance checks, your PAXG tokens will be delivered the next business day following a purchase request. 

(h) All conversions will be rounded down to the nearest 1/100th of a troy ounce. 

9. Converting Unallocated Gold into PAXG

9.1 You may not hold Unallocated Gold balances indefinitely on the Paxos Platform. All Unallocated Gold deposits will be treated by Paxos as pending PAXG deposits. You may transfer Unallocated Gold to Paxos’s custody using your Loco London Unallocated Gold account by instructing the institution managing your account to send Unallocated Gold to Paxos’s clearing bank. Once Unallocated Gold is received by Paxos’s clearing bank, you will receive a credit on the Paxos Platform that may be converted to PAXG tokens. Once your conversion of Unallocated Gold into PAXG clears, your account will be fully credited with the appropriate number of PAXG tokens. Unallocated Gold balance in your account at the daily cut-off time of 4:30 PM London time will be converted to PAXG. For additional information on this process, please refer to the Paxos User Guide, available at https://help.paxos.com.

9.2 Unallocated Gold balances held on the Paxos Platform are issued by a third party bank (a “Clearing Bank”). Your balance on the Paxos Platform entitles you to convert your Unallocated Gold balances to PAXG, or transfer this balance in unallocated form to another account, subject to the Clearing Bank’s solvency and ability to perform a transfer. Unallocated Gold balances may be subject to risk associated with the Clearing Bank that issues those balances. Paxos is not responsible for any losses associated with any default by a Clearing Bank, or any unavailability of your unallocated balance, either temporarily or permanently, due to non-performance of the Clearing Bank for any reason, including but not limited to, insolvency, default, or operational error. Please refer to the Clearing Bank’s terms and conditions and other disclosures to ensure that holding Unallocated Gold balances is appropriate for you.

10. Canceled Orders

Paxos 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.

11. Conversion and Redemption of PAXG

11.1 In order to convert or redeem PAXG through the Paxos Platform, you must have an Account. Your Account will have a unique deposit address to which you can send your PAXG in accordance with Section 7 of this PAXG Agreement. Upon sending your PAXG to your deposit address, Paxos will credit your Account a corresponding amount of PAXG. 

11.2 After your Account has been funded with PAXG, you may begin the process to convert PAXG into US Dollars, as follows: 

(a) You will be shown a Streaming Price Quote. The Streaming Price Quote will be updated every five (5) seconds; 

(b) Prior to the placement of a conversion order on the Paxos Platform, you will be required to review the amount of the conversion and the commission (if any) to be charged by the Paxos Platform. You will also be shown an updated Streaming Price Quote.

(c) You will have five (5) seconds to review and submit your conversion order. If your Streaming Price Quote expires, you must obtain a new price quote.

(d) During periods of extreme volatility and at Paxos’s sole discretion, the Streaming Price Quote may require you to request a new quote faster than every five (5) seconds. 

(e) Once a conversion of PAXG has been executed and the appropriate assets have been credited and debited, the transaction may not be reversible.

(f) Paxos may require a minimum amount for conversion, which may be updated from time to time. 

(g) All conversions will be rounded down to the nearest US cent. 

11.3 After your Account has been funded with PAXG, you will be given the option to convert the PAXG tokens into Unallocated Gold, as follows:

(a) You must enter the quantity of PAXG tokens you wish to convert, along with your Loco London Unallocated Gold account details (if your account is not held directly with a Loco London clearing member you will also include the details of your intermediary bank). 

(b) Once the request has been submitted and processed, Paxos will send via wire withdrawal the corresponding Unallocated Gold ounces to your disclosed account.

11.4 After your Account has been funded with PAXG, you will be given the option to redeem the PAXG tokens into Allocated Gold, as follows:  

(a) You must redeem 430 PAXG tokens plus the fee set forth in the Paxos User Guide available, at https://help.paxos.com, per London Good Delivery gold bar. 

(b) You may be subject to additional due diligence if you choose to redeem your PAXG tokens into Allocated Gold.

(c) You will receive further instructions via the email you provided with your Account as to how to receive delivery of your London Good Delivery gold bar(s). You are responsible for delivery and once your bars are in the possession of the delivery service you choose, then Paxos will have been deemed to have fulfilled its obligation for delivery.

(d) Once the specific London Good Delivery gold bars are determined, the PAXG tokens in excess of the actual weight of the delivered bars will be credited to your account, net any applicable fees. 

11.5 Paxos will make commercially reasonable efforts to convert and/or redeem your PAXG quickly. It may take up to several business days for your Account balance to reflect the conversion or redemption, depending on your method of conversion or redemption. 

12. Withdrawing US Dollars

12.1 Customers 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 Customer’s Account with the Paxos Platform to the bank account designated by, and owned by, the Customer. 

12.2 Paxos may impose withdrawal limits on your Account as per the Paxos User Guide, available at https://help.paxos.com. 

12.3 Please note that any withdrawal of US dollars may be delayed as necessary to comply with applicable law and/or Paxos’s compliance programs and policies, 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.

13. Forks

13.1 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. Paxos will evaluate all forks and make a determination, based on a number of factors, to support PAXG on one, and only one, of the Forks. Paxos will continue to provide Services for, support and hold US dollars against, PAXG held on the supported Fork only.

13.2 If a Fork occurs, you understand, acknowledge and agree that we may temporarily suspend the operations of the Paxos Platform.

14. Freezes and Upgrades

14.1 As part of the ERC20 smart contract and as part of the Services, Paxos has the ability and the right to freeze and upgrade all PAXG tokens (on an aggregate basis), regardless of where the PAXG is being held. Paxos will make commercially reasonable efforts to provide prior notice of any material freeze or upgrade and inform holders of PAXG of the reasons and consequences of such freeze and/or upgrade. Paxos will make commercially reasonable efforts to use the freeze and/or upgrade feature only under limited circumstances.

14.2 Paxos must comply with any legal directive to freeze, temporarily or permanently, user access to their PAXG or the Allocated Gold backing your PAXG with or without advance notice. Paxos will only freeze such assets (1) if required to do so by law, specifically when Paxos receives a formal legal directive from a regulator, judicial body, law enforcement agency, or other legal entity having jurisdiction over Paxos, (2) pursuant to a formal notification by a Paxos partner according to previously agreed contractual terms, or (3) as deemed necessary by Paxos in its sole discretion. Legal directive formats include court-ordered subpoenas, national security letters, and formal written directives from a regulator with oversight over Paxos.

14.3 Your PAXG and the Allocated Gold backing your PAXG may be subject to seizure or forfeiture by formal written legal directive from a regulator, judicial body, law enforcement agency, or other legal entity having jurisdiction over Paxos, and we will comply with the legal process in respect thereof. Seizure may not occur under any circumstances absent such a binding legal directive. If tokens are seized, the Paxos transaction generation will ensure that the seized funds are sent to a segregated wallet address held by Paxos for the purposes of seizure/forfeiture, until such time as they may be disposed of or otherwise handled as required by law.

14.4 If we determine after investigation that any of your PAXG have been used, or are being used, for illegal (or sanctioned) activity, we may not permit you to redeem your PAXG from Paxos, and, if presented for redemption, such PAXG and the Allocated Gold backing such PAXG may be forfeited.

14.5 Any PAXG or Allocated Gold underlying the PAXG that are subject to freeze, seizure, forfeiture or similar limitation on their use imposed by law may become wholly and permanently unrecoverable and unusable, and in appropriate circumstances, may be destroyed. If tokens are seized, the Paxos transaction generation will ensure that the seized funds are sent to a segregated wallet address held by Paxos for the purposes of seizure/forfeiture, until such time as they may be disposed of or otherwise handled as required by law.

14.6 This Section 14 applies to all holders of PAXG, regardless of whether the holder is a Customer of Paxos.

14.7 By using PAXG, you agree that we may take the actions set forth above and that we will not be liable to you as a result.

14.8 If you are aware of improper conduct involving a Paxos supported asset backed token, you should immediately contact Paxos at [email protected], as well as law enforcement, to work towards filing a law enforcement report. Paxos will make reasonable effort to cooperate with law enforcement inquiries and assist with investigations pertaining to Paxos supported asset backed tokens, including PAXG. 

14.9 Law enforcement may submit information requests to [email protected]. 

15. FEES

15.1 Fees will be charged upon the conversion of PAXG tokens. An overview of our fees on conversion and redemption is set forth in the Paxos User Guide, available at https://help.paxos.com or otherwise in the Pricing Supplement. In the event of a conflict between the Paxos User Guide and the Pricing Supplement, the Pricing Supplement will control.

15.2 Paxos may charge storage fees to all token holders starting no sooner than August 1, 2020 by issuing to Paxos 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 Customer. 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.

15.3 Your financial institution and/or the provider of your crypto-asset wallet may charge transaction and other fees related to the transfer of funds to your Account. To the extent Paxos is charged any banking fees by your financial institution or Paxos’s financial institution for the deposit or withdrawal of US dollars to or from your Account, Paxos will deduct an amount equal to any such fees from the amount being transferred.

15.4 Paxos may offer incentives or reduced fees to certain clients at Paxos’s sole discretion. 

15.5 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) (or equivalent amount in PAXG, if applicable) 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 periodic basis in US dollars.

15.6 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 or an updated Pricing Supplement. 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.

16. Illegal Use of PAXG

WE MAY FREEZE, TEMPORARILY OR PERMANENTLY, YOUR USE OF, AND ACCESS TO, PAXG OR THE LONDON GOOD DELIVERY GOLD BARS BACKING YOUR PAXG, WITH OR WITHOUT ADVANCE NOTICE.  

YOUR PAXG AND THE LONDON GOOD DELIVERY GOLD BARS 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 PAXG HAS BEEN USED, OR IS BEING USED, FOR ILLEGAL (OR SANCTIONED) ACTIVITY, WE MAY NOT PERMIT YOU TO REDEEM YOUR PAXG FROM PAXOS, AND, IF PRESENTED FOR REDEMPTION, SUCH PAXG AND THE ASSETS BACKING SUCH PAX MAY BE FORFEITED.

ANY PAXG OR FIAT CURRENCY UNDERLYING PAXG 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 CUSTOMER OF PAXOS.

BY USING PAXG, YOU AGREE THAT WE MAY TAKE THE ACTIONS SET FORTH IN THIS SECTION AND THAT WE WILL NOT BE LIABLE TO YOU AS A RESULT.