Paxful Holdings Inc., the company behind the peer-to-peer Bitcoin exchange that first closed in 2023 and then permanently in 2025, agreed to plead guilty to federal chargesand pay a $4 million fine to the U.S. Department of Justice. This is in addition to the $3.5 million civil penalty imposed on December 9 by the Financial Crimes Enforcement Network. – FinCEN is an official organization of the US Department of Treasury that deals with the detection and prevention of financial crimes. The Justice Department alleges that between 2017 and 2019, the company conducted approximately $3 billion in business and generated more than $29 million in revenue while knowingly facilitating illegal activities.
With Paxful, there is a chance to pay the fine
Paxful operated as a peer-to-peer exchange where users traded directly with each other without a central intermediary and users exchanged Bitcoin and other cryptocurrencies for fiat currency, prepaid cards and gift cards. According to the indictment, the exchange attracted its customers precisely by failing to implement anti-money laundering checks and deliberately choosing not to identify its customers. For example, Paxful has also been proven to process transactions from Backpage, an illegal prostitution advertising platform that was shut down by the Department of Justice in 2018. Between 2015 and 2022, nearly $17 million in Bitcoin flowed from Paxful to Backpage and similar sites, netting Paxful at least $2.7 million in profits.
According to the Justice Department, the platform also facilitated transactions with sanctioned countries, including Iran, North Korea and Venezuela, and processed more than $500 million in suspicious transactions. Despite being aware of crimes on its platform, Paxful failed to file required suspicious activity reports and misrepresented its anti-money laundering policies to third parties. Paxful pleaded guilty to three counts of conspiracy to violate the Travel Act by facilitating illegal prostitution, engaging in unauthorized money transmission activities and violating the requirements of the Bank Secrecy Act. The Travel Act is a U.S. law that prohibits anyone from supporting or encouraging illegal activities by traveling across state lines or internationally.
Although the appropriate fine under the applicable sentencing guidelines would be $112.5 million, the Justice Department determined that Paxful could reasonably pay only $4 million. Additionally, as noted above, FinCEN assessed Paxful a civil penalty of $3.5 million for willful violations of the Bank Secrecy Act. The company cooperated with investigators and implemented corrective actions after the management responsible for the violations was fired. Sentencing will take place on February 10, 2026. Paxful co-founder and former CTO Artur Schaback pleaded guilty to charges in the same fraud case in July 2024 and he was sentenced to five years in prison. The other founder, Ray Youssef, who was in constant conflict with Schaback at the end, started a new crypto project and has been running it ever since.
The company first announced on April 5, 2023 that it would be closing its platform. The reasons included the mass departure of employees, the tightening of US regulatory burdens and irregularities by the former co-founders. In 2023, Paxful tried to make a fresh start: they tried to regain the trust of the market with a new CEO, a renewed strategy and strengthening security, but the year 2025 left its mark on the story and they closed their doors for good this year.
The fine will be paid by Paxful Holdings Inc. are paid themselves, because the company still legally exists, only the trading platform is closed. Because the ministry and FinCEN have tailored the fine to the solvency of the company, it can be assumed that the company has sufficient assets to pay it.
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