Bitcoin Exchange Paxful pleads guilty and pays a $7.5 million fine

Source: PortaldoBitcoin Original Title: Paxful Bitcoin Exchange Pleads Guilty and Pays $7.5 Million Fine Original Link: Paxful Holdings, the company behind a peer-to-peer Bitcoin exchange that ceased operations in 2023, agreed to plead guilty to federal charges and pay a criminal fine of US$ 4 million to the U.S. Department of Justice. This fine is in addition to a civil penalty of US$ 3.5 million imposed by the Financial Crimes Enforcement Network (FinCEN).

The company facilitated transactions totaling approximately US$ 3 billion between 2017 and 2019, generating over US$ 29 million in revenue while knowingly allowing criminal activities, according to the Department of Justice.

Paxful operated as a peer-to-peer exchange through which users traded Bitcoin and other cryptocurrencies for fiat currency, prepaid cards, and gift cards.

“Paxful profited millions of dollars, in part, by knowingly moving cryptocurrencies to benefit fraudsters, extortionists, money launderers, and prostitution exploiters,” stated Acting Assistant Attorney General Matthew R. Galeotti of the Criminal Division of the Department of Justice in a statement.

“The defendant attracted its criminal clientele by promoting the lack of anti-money laundering controls and the deliberate decision not to identify its customers,” he continued.

It is worth noting that Paxful processed transactions for an illegal prostitution advertising platform seized by the Department of Justice in 2018.

Between 2015 and 2022, nearly US$ 17 million in Bitcoin were transferred from Paxful to similar platforms, generating at least US$ 2.7 million in profits for Paxful. The company’s founders reportedly celebrated the growth of their business.

The Department of Justice stated that the platform also facilitated transactions involving sanctioned countries, including Iran, North Korea, and Venezuela, processing over US$ 500 million in suspicious activities. Despite being aware of criminal conduct on its platform, Paxful did not submit the required suspicious activity reports and distorted its anti-money laundering policies to third parties.

Company Pleads Guilty

Paxful pleaded guilty to three conspiracy charges: violating the Travel Act by promoting illegal activities, operating an unlicensed money transfer business, and violating the Bank Secrecy Act requirements.

While the appropriate penalty was calculated at US$ 112.5 million under applicable sentencing guidelines, the Department of Justice determined that Paxful could pay only US$ 4 million.

Additionally, FinCEN imposed a civil fine of US$ 3.5 million on Paxful for intentional violations of the Bank Secrecy Act.

The company received some credit for cooperating with investigators and implementing corrective measures after dismissing leadership responsible for the violations. The sentencing is scheduled for February 10, 2026.

Paxful co-founder and former CTO, Artur Schaback, pleaded guilty in July 2024 to charges arising from the same scheme.