- Paxful pleaded guilty for turning a blind eye to criminals using its Bitcoin exchange.
- The company will pay a total of $7.5 million in criminal and civil penalties.
- Paxful closed its Bitcoin marketplace in 2023.
Paxful will pay $7.5 million in fines after admitting that it allowed criminals to use its peer-to-peer Bitcoin marketplace.
The US Department of Justice on Wednesday announced that the Delaware-based company made millions of dollars “in part by knowingly moving cryptocurrency for the benefit of fraudsters, extortionists, money launderers and purveyors of prostitution.”
Paxful Holdings Inc. pleaded guilty to three criminal counts, the Justice Department said.
The US Department of the Treasury’s Financial Crimes Enforcement Network said Tuesday that Paxful would also pay $3.5 million in civil penalties for willful violations of the Bank Secrecy Act.
“Paxful made millions of dollars in part by knowingly moving cryptocurrency for the benefit of fraudsters, extortionists, money launderers and purveyors of prostitution,” Acting Assistant Attorney General Matthew R. Galeotti, of the Justice Department’s Criminal Division, said in a Tuesday statement.
The company also allegedly facilitated transactions with ties to illicit activity and high-risk jurisdictions, including North Korea, said FinCEN director Andrea Gacki.
Backpage allegations
Feds said Paxful knew customers were transmitting criminal funds from fraudsters and the proceeds of illegal prostitution, and that from January 2017 to September 2019, the exchange processed $3 billion in trades, collecting nearly $30 million in revenue.
The Justice Department further alleged that Paxful was aware that customers from Backpage, an online advertising platform that advertised prostitution, had bought and sold Bitcoin on its exchange.
Paxful Holdings operated a peer-to-peer platform allowing users to buy and sell Bitcoin before the service closed in 2023.
Signing up for the website was straightforward, and users could buy the leading digital coin in fiat or other cryptocurrencies.
But the firm ran into trouble following the 2022 bankruptcy of digital asset lending platform Celsius.
Paxful released a product with Celsius — called Paxful Earn — that let customers earn interest on their crypto.
DL News reached out to Paxful for comment but did not immediately receive a response.
Mathew Di Salvo is a news correspondent with DL News. Got a tip? Email at mdisalvo@dlnews.com.
