Paxful Holdings Inc. Pleads Guilty to Federal Charges, Agrees to Pay $7.5 Million in Penalties
Paxful Holdings Inc., a peer-to-peer cryptocurrency exchange that operated until 2023, has pled guilty to federal charges and will pay a total of $7.5 million in criminal and civil penalties, consisting of $4 million in criminal and $3.5 million in civil penalties.
The Department of Justice (DOJ) alleges that between 2017 and 2019, Paxful processed approximately $3 billion in trades, generating over $29 million in revenue while knowingly enabling criminal activity. The company is accused of moving cryptocurrency for fraudsters, extortionists, money launderers, and purveyors of prostitution by promoting lax anti-money-laundering controls and failing to properly identify customers or report suspicious activity.
Paxful allegedly processed transactions for Backpage, an illegal prostitution advertising platform. From 2015 to 2022, about $17 million in Bitcoin flowed to Backpage and similar sites, generating at least $2.7 million in profits for Paxful.
The platform also facilitated over $500 million in suspicious activity involving sanctioned countries, including Iran, North Korea, and Venezuela.
Paxful pled guilty to three conspiracy charges: violating the Travel Act by promoting illegal prostitution, operating an unlicensed money transmitting business, and violating the Bank Secrecy Act. Co-founder and former CTO Artur Schaback previously pleaded guilty in July 2024 in connection with the same scheme.
Sentencing for Paxful is scheduled for February 10, 2026.
