Paxful Pleads Guilty to Enabling Illegal Activity and Ignoring AML Laws
Paxful has pleaded guilty to a three-count criminal information related to enabling illegal activity such as prostitution, fraud, and sanctions evasion. The charges include violations of the Travel Act, operating an unlicensed money transmitting business, and failure to implement an anti-money laundering (AML) program as required under the Bank Secrecy Act.
Between 2015 and 2019, Paxful processed nearly $3 billion in cryptocurrency trades and earned over $29 million in fees while evading AML rules and serving high-risk users. The platform was linked to Backpage and similar sites, with approximately $17 million in bitcoin moving between Paxful and these sites.
Paxful actively marketed its lack of identity checks and weak compliance controls to attract users looking to evade detection. The company failed to report suspicious activities and facilitated transfers from high-risk jurisdictions including Iran and North Korea.
Former Paxful chief technology officer Artur Schaback pleaded guilty last year to related AML violations. The case is the result of a joint investigation involving the Department of Justice, IRS Criminal Investigation, Homeland Security Investigations, and FinCEN.
Paxful reduced its potential penalties from $112.5 million to $4 million following a financial condition assessment. Sentencing is scheduled for February 2026.
