Headline: DOJ slaps Paxful with $4M criminal fine after probe finds platform enabled illicit payments The U.S. Department of Justice has ordered peer-to-peer crypto marketplace Paxful to pay a $4 million criminal fine after the company pleaded guilty to multiple federal charges tied to failures in anti-money‑laundering controls and knowingly moving illicit funds. Key facts - Paxful admitted guilt to charges including conspiracy to violate the Travel Act (for promoting illegal prostitution), operating an unlicensed money‑transmitting business, and dealing with funds sourced from criminal activity. - The DOJ said Paxful “profited from moving money for criminals” by promoting weak AML controls and failing to comply with money‑laundering laws, despite being aware that users were running fraud, extortion, prostitution and commercial sex‑trafficking schemes. - Prosecutors initially calculated a criminal penalty of $112.5 million, but reduced the amount to $4 million after determining Paxful lacked the financial capacity to pay the larger sum. - Between December 2015 and December 2022, the DOJ says Paxful acted as a primary payment conduit for Backpage and copycat classified‑ad sites. Roughly $17 million in Bitcoin was routed through Paxful to those platforms, generating millions in company revenue; the DOJ pegged Paxful’s take at about $2.7 million. - The complaint alleges Paxful and its founders marketed the exchange as KYC‑compliant while knowing many customers were engaged in illicit activity, even boasting internally about a so‑called “Backpage Effect” that accelerated growth. - Co‑founder Artur Schaback pleaded guilty in July 2024 to conspiracy to willfully fail to maintain an effective AML program and faces up to five years in prison under his plea agreement. Ray Youssef stepped down in April 2023 amid a public fallout and has since distanced himself from the company’s legal troubles. Company trajectory and fallout Paxful briefly suspended services in April 2023, resumed soon after, and ultimately shut down permanently in late 2025. In a company blog post, Paxful cited unsustainable compliance‑remediation costs and the legal fallout from “historic misconduct” by its original co‑founders as reasons for its closure. What this means for the industry The case is a sharp reminder that peer‑to‑peer crypto marketplaces are under increasing DOJ scrutiny, particularly around AML controls and the risk of facilitating payments for illegal online markets. Enforcement actions like this signal continued pressure on crypto platforms to demonstrate meaningful compliance or face criminal penalties. Read more AI-generated news on: undefined/news