Verify a decision

{"actor":"system:backfill","investigation_id":"c343e558-d4d7-4d71-b58f-b06cbbca05ae","kind":"publish","page_slug":"paxful","published_at":"2026-06-02T19:17:49.016Z","sequence_num":1,"snapshot":{"content_type":"investigation","entity_name":"Paxful","sections":[{"content":"Paxful was founded in 2015 by Ray Youssef (CEO) and Artur Schaback (CTO/CPO/COO) as a peer-to-peer Bitcoin marketplace, conceptually similar to eBay or Craigslist for cryptocurrency. The company, originally prototyped under the name EasyBitz as a Bitcoin payment gateway, pivoted to P2P trading and grew to support over 300 payment methods — notably including gift cards, which became a hallmark of the platform. At its peak, Paxful reported approximately 14 million registered users across more than 140 countries and over $5 billion in cumulative trades. The company employed more than 200 people in offices in New York, Tallinn (Estonia), Hong Kong, and Manila. Paxful's gift-card-for-bitcoin trading model gave it broad penetration in underbanked markets, particularly across sub-Saharan Africa and the Middle East. In January 2017 through September 2019 alone, the platform processed approximately 26.7 million trades worth roughly $3 billion.","heading":"Corporate Overview and History","severity":"low","sources":[{"credibility":2,"name":"Drugs, Erratic Dismissals and Feuding Founders: Behind Bitcoin Marketplace Paxful's Unraveling — CoinDesk","type":"news_article","url":"https://www.coindesk.com/tech/2023/04/08/drugs-erratic-dismissals-and-feuding-founders-behind-bitcoin-marketplace-paxfuls-unraveling"},{"credibility":1,"name":"Paxful Announces Decision to Wind Down Operations — Paxful Blog","type":"official","url":"https://paxful.com/blog/paxful-closure-announcement"},{"credibility":2,"name":"DOJ and FinCEN Reach Resolutions — Paul, Weiss","type":"research","url":"https://www.paulweiss.com/insights/client-memos/doj-and-fincen-reach-resolutions-with-us-based-virtual-asset-trading-platform-for-anti-money-laundering-violations"}]},{"content":"On December 9, 2025, Paxful Holdings, Inc. entered a guilty plea in the U.S. District Court for the Eastern District of California to three counts of federal conspiracy: (1) conspiracy to willfully fail to maintain an effective anti-money laundering program in violation of the Bank Secrecy Act; (2) conspiracy to operate an unlicensed money transmitting business; and (3) conspiracy to violate the Travel Act by promoting illegal prostitution through interstate commerce. Under the plea agreement, the parties agreed that the criminal conduct warranted a penalty of $112,500,000, but this was reduced to $4 million reflecting Paxful's limited financial ability to pay as it wound down operations. The company was formally sentenced on February 10, 2026. The DOJ's investigation, filed in the Eastern District of California, was led by the Money Laundering, Narcotics, and Forfeiture Section. U.S. Attorney Eric Grant stated: 'This sentence sends a clear message: companies that turn a blind eye to criminal activity will face serious consequences under U.S. law.'","heading":"Criminal Guilty Plea and DOJ Enforcement (December 2025 — February 2026)","severity":"critical","sources":[{"credibility":1,"name":"DOJ — Virtual Asset Trading Platform Pleads Guilty to Violating the Travel Act (Dec 9, 2025)","type":"regulatory","url":"https://www.justice.gov/opa/pr/virtual-asset-trading-platform-pleads-guilty-violating-travel-act-and-other-federal-criminal"},{"credibility":1,"name":"DOJ — Virtual Asset Trading Platform Sentenced (Feb 10, 2026)","type":"regulatory","url":"https://www.justice.gov/opa/pr/virtual-asset-trading-platform-sentenced-violating-travel-act-and-other-federal-criminal"},{"credibility":2,"name":"Paxful Pleads Guilty to Aiding Crime, Ignoring AML Laws — CoinDesk","type":"news_article","url":"https://www.coindesk.com/policy/2025/12/10/paxful-pleads-guilty-to-aiding-crime-ignoring-aml-laws"},{"credibility":2,"name":"U.S. DOJ Hits Paxful for $4 Million in Case Tied to Illegal Sex Work, Money Laundering — CoinDesk (Feb 11, 2026)","type":"news_article","url":"https://www.coindesk.com/policy/2026/02/11/u-s-doj-hits-paxful-for-usd4-million-in-case-tied-to-illegal-sex-work-money-laundering"}]},{"content":"Concurrent with the DOJ resolution, the U.S. Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) announced on December 9, 2025, a $3.5 million civil money penalty against Paxful, Inc. and Paxful USA, Inc. for willful violations of the Bank Secrecy Act. FinCEN found that Paxful willfully failed to: register with FinCEN as a money services business (MSB) — allowing its MSB registration to lapse for 974 days while continuing to operate; develop, implement, and maintain an effective AML program; and file Suspicious Activity Reports (SARs). Paxful admitted to facilitating over $500 million in suspicious activity linked to fraud schemes, sanctions-evading transactions involving Iran, North Korea, and Venezuela, proceeds from child sexual abuse material (CSAM) marketplaces, darknet markets, and ransomware payments. FinCEN agreed to credit $1.75 million of the $3.5 million penalty against the DOJ criminal fine, with Paxful paying $1.75 million directly to the U.S. Treasury. As a mitigating factor, FinCEN cited Paxful's decision to remove prior leadership responsible for the violations. The consent order was dated December 9, 2025.","heading":"FinCEN Civil Enforcement Action (December 2025)","severity":"critical","sources":[{"credibility":1,"name":"FinCEN News Release — Assesses $3.5 Million Penalty Against Paxful","type":"regulatory","url":"https://www.fincen.gov/news/news-releases/fincen-assesses-35-million-penalty-against-paxful-facilitating-suspicious"},{"credibility":1,"name":"FinCEN Paxful Consent Order (PDF, December 2025)","type":"court_filing","url":"https://www.fincen.gov/system/files/2025-12/PaxfulConsentOrder.pdf"},{"credibility":2,"name":"FinCEN Publishes Compliance Considerations in Parallel Civil and DOJ Enforcement — Akin Gump","type":"research","url":"https://www.akingump.com/en/insights/alerts/fincen-publishes-first-set-of-compliance-considerations-in-parallel-civil-and-doj-enforcement-actions-against-crypto-company-paxful"}]},{"content":"According to the DOJ and FinCEN enforcement documents, Paxful operated from its founding in July 2015 without a compliant AML program for several years. The company did not designate a compliance officer until November 2018, did not implement a written AML program until July 2019, and did not begin providing employee AML training until June 2019. Paxful never filed a single Suspicious Activity Report with FinCEN until November 2019 — more than four years after commencing operations. The company actively marketed itself as a platform that did not require Know Your Customer (KYC) identification from users. According to the DOJ, Paxful's founders 'boasted about the Backpage Effect,' referring to the platform's growth attributable to transactions processed on behalf of Backpage, an online advertising platform whose owners admitted in criminal proceedings to facilitating illegal prostitution including involving minors. Internal communications cited in enforcement documents indicated that leadership at times instructed employees not to file SARs on suspicious activity. In addition, Paxful presented fake AML policies to third-party financial institutions while not implementing or enforcing those policies in practice. Paxful also allowed users to transact using geographic spoofing to circumvent controls designed to exclude users from sanctioned jurisdictions.","heading":"Anti-Money Laundering (AML) Program Failures","severity":"critical","sources":[{"credibility":1,"name":"DOJ — Virtual Asset Trading Platform Sentenced (Feb 10, 2026)","type":"regulatory","url":"https://www.justice.gov/opa/pr/virtual-asset-trading-platform-sentenced-violating-travel-act-and-other-federal-criminal"},{"credibility":1,"name":"FinCEN News Release — Assesses $3.5 Million Penalty Against Paxful","type":"regulatory","url":"https://www.fincen.gov/news/news-releases/fincen-assesses-35-million-penalty-against-paxful-facilitating-suspicious"},{"credibility":2,"name":"DOJ and FinCEN Reach Resolutions — Paul, Weiss","type":"research","url":"https://www.paulweiss.com/insights/client-memos/doj-and-fincen-reach-resolutions-with-us-based-virtual-asset-trading-platform-for-anti-money-laundering-violations"},{"credibility":2,"name":"Despite Changing Priorities, DOJ Enforces AML Requirements Against Cryptocurrency Marketplace — Troutman Pepper Locke","type":"research","url":"https://www.troutman.com/insights/despite-changing-priorities-dojs-money-laundering-narcotics-and-forfeiture-section-enforces-aml-requirements-against-cryptocurrency-marketplace/"}]},{"content":"The DOJ and FinCEN enforcement actions identified multiple categories of illicit activity facilitated by Paxful. (1) Backpage and illegal prostitution: Between December 2015 and December 2022, Paxful knowingly transferred approximately $17 million in Bitcoin from Paxful wallets to Backpage.com and a copycat site, earning at least $2.7 million in profits. Backpage was seized by the DOJ in April 2018 for facilitating illegal prostitution and sex trafficking including involving minors. Paxful continued processing payments to a Backpage copycat site after the original was shut down. (2) Child Sexual Abuse Material (CSAM): Paxful failed to file timely SARs for transactions involving known CSAM marketplaces including Welcome to Video and Dark Scandals. (3) Sanctions evasion: Paxful facilitated transactions for state actors linked to Iran and North Korea, and for customers in Venezuela, despite U.S. sanctions prohibiting such dealings. Geographic spoofing by users allowed access from sanctioned jurisdictions. (4) Ransomware and cybercrime: The platform processed proceeds linked to at least 26 ransomware strains including SamSam and Trickbot, and to darknet marketplaces including AlphaBay. (5) Unregistered mixers: Paxful processed the equivalent of over $35 million through unregistered convertible virtual currency mixers. In aggregate, FinCEN identified over $500 million in suspicious transactions across these categories.","heading":"Illicit Activity Facilitated: Backpage, CSAM, Sanctions, Ransomware","severity":"critical","sources":[{"credibility":1,"name":"FinCEN News Release — Assesses $3.5 Million Penalty Against Paxful","type":"regulatory","url":"https://www.fincen.gov/news/news-releases/fincen-assesses-35-million-penalty-against-paxful-facilitating-suspicious"},{"credibility":1,"name":"FinCEN Paxful Consent Order (PDF, December 2025)","type":"court_filing","url":"https://www.fincen.gov/system/files/2025-12/PaxfulConsentOrder.pdf"},{"credibility":1,"name":"DOJ — Virtual Asset Trading Platform Sentenced (Feb 10, 2026)","type":"regulatory","url":"https://www.justice.gov/opa/pr/virtual-asset-trading-platform-sentenced-violating-travel-act-and-other-federal-criminal"},{"credibility":2,"name":"Paxful Pleads Guilty to Aiding Crime, Ignoring AML Laws — CoinDesk","type":"news_article","url":"https://www.coindesk.com/policy/2025/12/10/paxful-pleads-guilty-to-aiding-crime-ignoring-aml-laws"}]},{"content":"On July 8, 2024, Artur Schaback — Paxful's co-founder and former Chief Technology Officer — pleaded guilty in U.S. District Court in California to conspiracy to willfully fail to maintain an effective anti-money laundering program, in violation of the Bank Secrecy Act. Schaback's conduct pertained to the period from July 2015 through June 2019, during which he and co-conspirators marketed Paxful as not requiring KYC, allowed accounts to be opened without adequate identity verification, presented fake AML policies to third parties, and declined to file SARs despite knowledge of suspicious and criminal user activity. Under his plea agreement, Schaback agreed to pay $5 million in fines, structured as $1 million at the time of his guilty plea, $3 million by sentencing, and $1 million within two years thereafter. Schaback faces a maximum of five years in prison. As of June 2026, Schaback has not yet been sentenced; his sentencing hearing was moved from January 2026 to May 2026 as prosecutors indicated he was continuing to cooperate with the ongoing investigation into Paxful and its former CEO.","heading":"Co-Founder Artur Schaback: Earlier Individual Guilty Plea","severity":"critical","sources":[{"credibility":1,"name":"DOJ — Paxful Inc. Co-Founder Pleads Guilty to Conspiracy to Fail to Maintain Effective AML Program","type":"regulatory","url":"https://www.justice.gov/archives/opa/pr/paxful-inc-co-founder-pleads-guilty-conspiracy-fail-maintain-effective-anti-money-laundering"},{"credibility":2,"name":"Paxful Co-Founder Artur Schaback Pleads Guilty to Money Laundering Conspiracy — Charltons Quantum","type":"news_article","url":"https://charltonsquantum.com/paxful-co-founder-artur-schaback-pleads-guilty-to-money-laundering-conspiracy/"},{"credibility":2,"name":"Paxful Co-Founder Faces Prison Time for AML Violations — Coinspeaker","type":"news_article","url":"https://www.coinspeaker.com/paxful-co-founder-prison-time-aml/"},{"credibility":2,"name":"Paxful Co-Founder Schaback Faces 5 Years Jail, Admits AML Failure — CoinTelegraph","type":"news_article","url":"https://cointelegraph.com/news/paxful-cofounder-faces-five-years-jail-aml-program"}]},{"content":"On December 13, 2025, four days after Paxful Holdings entered its guilty plea, the DOJ indicted Ray Youssef, Paxful's co-founder and former CEO, in the U.S. District Court for the Eastern District of California. Youssef was charged with willfully failing to maintain an effective AML program, willfully failing to file SARs, and operating an unlicensed money transmitting business — charges substantially parallel to those faced by co-founder Schaback and by the company. According to accounts from Youssef himself, he was in Mexico when authorities deported him to Los Angeles; he was subsequently arrested and briefly detained in a facility in Santa Ana, California, before a federal judge ordered his release under supervision. As a condition of release, Youssef is not permitted to leave the United States pending resolution of the case. As of June 2026, the criminal case against Youssef is ongoing; he has contested the charges, publicly describing them as 'bogus' and claiming the case rests primarily on approximately $240 worth of Bitcoin transactions. Following his indictment, Youssef stepped down from his role as CEO of NoOnes, a separate P2P crypto platform he founded after leaving Paxful, with NoOnes publicly stating that 'any legal matters involving Ray Youssef are personal and unrelated to NoOnes.'","heading":"Co-Founder Ray Youssef: Indictment and Criminal Charges","severity":"critical","sources":[{"credibility":2,"name":"Paxful Founder Indicted Days After Company's Guilty Plea — BeInCrypto","type":"news_article","url":"https://beincrypto.com/ray-youssef-indicted-doj-paxful-case/"},{"credibility":2,"name":"DOJ Indicts Paxful Founder Days After Company Pleads Guilty — Yahoo Finance","type":"news_article","url":"https://www.yahoo.com/news/articles/doj-indicts-paxful-founder-days-184324987.html"},{"credibility":2,"name":"Ex-Paxful CEO Charged Over Anti-Money Laundering Failures — Law360","type":"news_article","url":"https://www.law360.com/articles/2446747/ex-paxful-ceo-charged-over-anti-money-laundering-failures"},{"credibility":2,"name":"Crypto Exchange NoOnes Confirms Ray Youssef Is No Longer CEO — TechPoint Africa","type":"news_article","url":"https://techpoint.africa/news/crypto-exchange-noones-confirms-ray-youssef-is-no-longer-ceo/"}]},{"content":"Internal dysfunction at Paxful predated regulatory enforcement. Beginning in October 2021, co-founder Artur Schaback took paternity leave, after which he returned to find his email, Slack access, and corporate credit card revoked, and his COO title removed by Youssef. An internal investigation in June 2022 found no wrongdoing by Schaback. In August 2022, Youssef publicly declared on social media, 'I am the founder of Paxful. I have no cofounders.' In January 2023, Schaback filed suit alleging wrongful termination, misappropriation of company funds, alleged money laundering, and alleged plans to circumvent international sanctions on transactions into and out of Russia. The structural cause of the deadlock was a 50/50 Class B stockholding with unanimous board approval required for decisions, with both founders as the only two directors. A Delaware Chancery Court subsequently appointed a custodian. In April 2023 Paxful temporarily suspended marketplace operations; in May 2023 the platform relaunched under new interim CEO Roshan Dharia after the board structure was resolved. Separately, a CoinDesk investigation in April 2023 reported that in September 2016 both Youssef and Schaback were arrested in Miami Beach in connection with the presence of an AR-15 rifle and drug possession (cocaine and hashish) at a penthouse; charges were dismissed. The same investigation reported Youssef's February 2017 arrest in Tallinn on suspicion of drug trafficking for allegedly procuring MDMA and steroids via the dark web.","heading":"Founder Dispute, Corporate Governance Collapse, and 2023 Shutdown","severity":"high","sources":[{"credibility":2,"name":"Drugs, Erratic Dismissals and Feuding Founders: Behind Bitcoin Marketplace Paxful's Unraveling — CoinDesk","type":"news_article","url":"https://www.coindesk.com/tech/2023/04/08/drugs-erratic-dismissals-and-feuding-founders-behind-bitcoin-marketplace-paxfuls-unraveling"},{"credibility":2,"name":"Paxful Co-Founders' Litigation Cites Misappropriation of Funds, Money Laundering, U.S. Sanctions Evasion — CoinTelegraph","type":"news_article","url":"https://cointelegraph.com/news/paxful-co-founders-litigation-cites-misappropriation-of-funds-money-laundering-u-s-sanctions-evasion"},{"credibility":2,"name":"Paxful Marketplace Back Online Following Temporary Suspension — CoinDesk (May 2023)","type":"news_article","url":"https://www.coindesk.com/business/2023/05/08/paxful-marketplace-back-online-following-temporary-suspension"}]},{"content":"On or before November 1, 2025, Paxful formally ceased all operations. The company's official announcement cited 'the lasting impact of historic misconduct by former co-founders Ray Youssef and Artur Schaback prior to 2023' and 'unsustainable costs from extensive compliance remediation efforts' as the primary drivers. The company stated it remained financially stable but assessed that long-term sustainability was not viable. In its closure notice, Paxful reported serving approximately 14 million registered users across more than 140 countries. Users were urged to withdraw balances promptly. The closure preceded the December 2025 guilty plea by approximately one month, suggesting wind-down discussions with DOJ/FinCEN were ongoing concurrently with the enforcement negotiations.","heading":"Final Shutdown (November 2025)","severity":"medium","sources":[{"credibility":1,"name":"Paxful Announces Decision to Wind Down Operations — Paxful Blog","type":"official","url":"https://paxful.com/blog/paxful-closure-announcement"},{"credibility":2,"name":"Paxful to Wind Down Operations by November 1, 2025 — Bitcoin.com News","type":"news_article","url":"https://news.bitcoin.com/paxful-to-wind-down-operations-by-november-1-2025/"}]},{"content":"The combined enforcement actions resulted in the following financial penalties against Paxful and its co-founders: (1) Paxful Holdings — $4 million DOJ criminal fine (sentencing: February 10, 2026), reduced from an agreed guideline amount of $112.5 million; (2) Paxful, Inc. / Paxful USA, Inc. — $3.5 million FinCEN civil penalty (with $1.75 million credited against the DOJ fine, net payment $1.75 million to Treasury); (3) Artur Schaback — $5 million personal fine per plea agreement (July 2024); sentencing and final amounts pending as of June 2026; (4) Ray Youssef — criminal case ongoing as of June 2026; no fine or sentence imposed yet. The total financial accountability across the company and its founders exceeds $12.5 million, against a guideline criminal penalty of $112.5 million that was reduced solely due to Paxful's inability to pay.","heading":"Total Penalties and Combined Financial Impact","severity":"critical","sources":[{"credibility":1,"name":"DOJ — Virtual Asset Trading Platform Sentenced (Feb 10, 2026)","type":"regulatory","url":"https://www.justice.gov/opa/pr/virtual-asset-trading-platform-sentenced-violating-travel-act-and-other-federal-criminal"},{"credibility":1,"name":"FinCEN News Release — Assesses $3.5 Million Penalty Against Paxful","type":"regulatory","url":"https://www.fincen.gov/news/news-releases/fincen-assesses-35-million-penalty-against-paxful-facilitating-suspicious"},{"credibility":2,"name":"Bitcoin Exchange Paxful to Pay $7.5 Million in US DOJ and FinCEN Fines — Sumsub","type":"news_article","url":"https://sumsub.com/media/news/bitcoin-exchange-paxful-to-pay-us-doj-and-fincen-fines/"}]}],"sources_used":[{"credibility":1,"name":"DOJ — Virtual Asset Trading Platform Pleads Guilty to Violating the Travel Act (Dec 9, 2025)","type":"regulatory","url":"https://www.justice.gov/opa/pr/virtual-asset-trading-platform-pleads-guilty-violating-travel-act-and-other-federal-criminal"},{"credibility":1,"name":"DOJ — Virtual Asset Trading Platform Sentenced for Violating the Travel Act (Feb 10, 2026)","type":"regulatory","url":"https://www.justice.gov/opa/pr/virtual-asset-trading-platform-sentenced-violating-travel-act-and-other-federal-criminal"},{"credibility":1,"name":"DOJ — Paxful Inc. Co-Founder Pleads Guilty to Conspiracy to Fail to Maintain Effective AML Program (Jul 8, 2024)","type":"regulatory","url":"https://www.justice.gov/archives/opa/pr/paxful-inc-co-founder-pleads-guilty-conspiracy-fail-maintain-effective-anti-money-laundering"},{"credibility":1,"name":"FinCEN News Release — FinCEN Assesses $3.5 Million Penalty Against Paxful (Dec 9, 2025)","type":"regulatory","url":"https://www.fincen.gov/news/news-releases/fincen-assesses-35-million-penalty-against-paxful-facilitating-suspicious"},{"credibility":1,"name":"FinCEN Paxful Consent Order (PDF, December 2025)","type":"court_filing","url":"https://www.fincen.gov/system/files/2025-12/PaxfulConsentOrder.pdf"},{"credibility":2,"name":"Paxful Pleads Guilty to Aiding Crime, Ignoring AML Laws — CoinDesk (Dec 10, 2025)","type":"news_article","url":"https://www.coindesk.com/policy/2025/12/10/paxful-pleads-guilty-to-aiding-crime-ignoring-aml-laws"},{"credibility":2,"name":"U.S. DOJ Hits Paxful for $4 Million in Case Tied to Illegal Sex Work — CoinDesk (Feb 11, 2026)","type":"news_article","url":"https://www.coindesk.com/policy/2026/02/11/u-s-doj-hits-paxful-for-usd4-million-in-case-tied-to-illegal-sex-work-money-laundering"},{"credibility":2,"name":"Paxful Founder Indicted Days After Company's Guilty Plea — BeInCrypto","type":"news_article","url":"https://beincrypto.com/ray-youssef-indicted-doj-paxful-case/"},{"credibility":2,"name":"DOJ Indicts Paxful Founder Days After Company Pleads Guilty — Yahoo Finance","type":"news_article","url":"https://www.yahoo.com/news/articles/doj-indicts-paxful-founder-days-184324987.html"},{"credibility":2,"name":"Ex-Paxful CEO Charged Over Anti-Money Laundering Failures — Law360","type":"news_article","url":"https://www.law360.com/articles/2446747/ex-paxful-ceo-charged-over-anti-money-laundering-failures"},{"credibility":2,"name":"Drugs, Erratic Dismissals and Feuding Founders: Behind Bitcoin Marketplace Paxful's Unraveling — CoinDesk (Apr 8, 2023)","type":"news_article","url":"https://www.coindesk.com/tech/2023/04/08/drugs-erratic-dismissals-and-feuding-founders-behind-bitcoin-marketplace-paxfuls-unraveling"},{"credibility":2,"name":"Paxful Co-Founders' Litigation Cites Misappropriation of Funds, Money Laundering, U.S. Sanctions Evasion — CoinTelegraph","type":"news_article","url":"https://cointelegraph.com/news/paxful-co-founders-litigation-cites-misappropriation-of-funds-money-laundering-u-s-sanctions-evasion"},{"credibility":2,"name":"Paxful Marketplace Back Online Following Temporary Suspension — CoinDesk (May 8, 2023)","type":"news_article","url":"https://www.coindesk.com/business/2023/05/08/paxful-marketplace-back-online-following-temporary-suspension"},{"credibility":1,"name":"Paxful Announces Decision to Wind Down Operations — Paxful Blog","type":"official","url":"https://paxful.com/blog/paxful-closure-announcement"},{"credibility":2,"name":"Paxful to Wind Down Operations by November 1, 2025 — Bitcoin.com News","type":"news_article","url":"https://news.bitcoin.com/paxful-to-wind-down-operations-by-november-1-2025/"},{"credibility":2,"name":"Paxful Co-Founder Artur Schaback Pleads Guilty to Money Laundering Conspiracy — Charltons Quantum","type":"news_article","url":"https://charltonsquantum.com/paxful-co-founder-artur-schaback-pleads-guilty-to-money-laundering-conspiracy/"},{"credibility":2,"name":"Paxful Co-Founder Schaback Faces 5 Years Jail, Admits AML Failure — CoinTelegraph","type":"news_article","url":"https://cointelegraph.com/news/paxful-cofounder-faces-five-years-jail-aml-program"},{"credibility":2,"name":"DOJ and FinCEN Reach Resolutions With U.S.-Based Virtual Asset Trading Platform — Paul, Weiss","type":"research","url":"https://www.paulweiss.com/insights/client-memos/doj-and-fincen-reach-resolutions-with-us-based-virtual-asset-trading-platform-for-anti-money-laundering-violations"},{"credibility":2,"name":"Despite Changing Priorities, DOJ Enforces AML Requirements Against Cryptocurrency Marketplace — Troutman Pepper Locke","type":"research","url":"https://www.troutman.com/insights/despite-changing-priorities-dojs-money-laundering-narcotics-and-forfeiture-section-enforces-aml-requirements-against-cryptocurrency-marketplace/"},{"credibility":2,"name":"Crypto Exchange NoOnes Confirms Ray Youssef Is No Longer CEO — TechPoint Africa","type":"news_article","url":"https://techpoint.africa/news/crypto-exchange-noones-confirms-ray-youssef-is-no-longer-ceo/"},{"credibility":2,"name":"FinCEN Penalizes Crypto Firm for BSA Violations — ABA Banking Journal","type":"news_article","url":"https://bankingjournal.aba.com/2025/12/fincen-penalizes-crypto-firm-for-bsa-violations/"}],"summary":"Paxful was a U.S.-based peer-to-peer Bitcoin marketplace founded in 2015 by Ray Youssef and Artur Schaback. After operating for a decade and processing approximately $5 billion in trades across 14 million users, the platform ceased operations by November 1, 2025, citing the lasting impact of historic compliance failures and unsustainable remediation costs. In December 2025, Paxful Holdings pleaded guilty to three federal criminal charges — including conspiring to violate the Travel Act, operating an unlicensed money transmitting business, and BSA anti-money laundering violations — and was sentenced in February 2026 to a $4 million criminal penalty; FinCEN separately assessed a $3.5 million civil penalty for the same underlying conduct.","timeline":[{"date":"2015-07-01","event":"Paxful founded by Ray Youssef and Artur Schaback as a peer-to-peer Bitcoin marketplace; begins operating without a registered Money Services Business license, AML program, or KYC requirements.","source":"DOJ Sentencing Press Release","source_url":"https://www.justice.gov/opa/pr/virtual-asset-trading-platform-sentenced-violating-travel-act-and-other-federal-criminal"},{"date":"2015-12-01","event":"Paxful begins knowingly processing Bitcoin payments on behalf of Backpage.com, an illegal prostitution advertising platform, according to DOJ court documents.","source":"DOJ — Virtual Asset Trading Platform Sentenced","source_url":"https://www.justice.gov/opa/pr/virtual-asset-trading-platform-sentenced-violating-travel-act-and-other-federal-criminal"},{"date":"2016-09-01","event":"Co-founders Ray Youssef and Artur Schaback are arrested in Miami Beach following an incident involving an AR-15 rifle and drug possession (cocaine and hashish). Charges are later dismissed.","source":"CoinDesk — Drugs, Erratic Dismissals and Feuding Founders","source_url":"https://www.coindesk.com/tech/2023/04/08/drugs-erratic-dismissals-and-feuding-founders-behind-bitcoin-marketplace-paxfuls-unraveling"},{"date":"2017-02-01","event":"Ray Youssef is arrested in Tallinn, Estonia on suspicion of drug trafficking, allegedly for procuring MDMA and steroids via darknet markets.","source":"CoinDesk — Drugs, Erratic Dismissals and Feuding Founders","source_url":"https://www.coindesk.com/tech/2023/04/08/drugs-erratic-dismissals-and-feuding-founders-behind-bitcoin-marketplace-paxfuls-unraveling"},{"date":"2018-04-01","event":"DOJ seizes Backpage.com. Despite the seizure, Paxful allegedly continues processing payments to a Backpage copycat site for approximately four more years.","source":"DOJ — Virtual Asset Trading Platform Sentenced","source_url":"https://www.justice.gov/opa/pr/virtual-asset-trading-platform-sentenced-violating-travel-act-and-other-federal-criminal"},{"date":"2018-11-01","event":"Paxful designates its first compliance officer — approximately three years after beginning operations.","source":"Paul, Weiss — DOJ and FinCEN Reach Resolutions","source_url":"https://www.paulweiss.com/insights/client-memos/doj-and-fincen-reach-resolutions-with-us-based-virtual-asset-trading-platform-for-anti-money-laundering-violations"},{"date":"2019-07-01","event":"Paxful implements its first written AML program — four years after founding.","source":"Paul, Weiss — DOJ and FinCEN Reach Resolutions","source_url":"https://www.paulweiss.com/insights/client-memos/doj-and-fincen-reach-resolutions-with-us-based-virtual-asset-trading-platform-for-anti-money-laundering-violations"},{"date":"2019-11-01","event":"Paxful files its first Suspicious Activity Report (SAR) with FinCEN — more than four years after commencing operations.","source":"FinCEN News Release","source_url":"https://www.fincen.gov/news/news-releases/fincen-assesses-35-million-penalty-against-paxful-facilitating-suspicious"},{"date":"2021-10-01","event":"Artur Schaback takes paternity leave; upon returning finds his access to company systems and credit card revoked, and his COO title removed by Youssef. Beginning of documented co-founder conflict.","source":"CoinDesk — Drugs, Erratic Dismissals and Feuding Founders","source_url":"https://www.coindesk.com/tech/2023/04/08/drugs-erratic-dismissals-and-feuding-founders-behind-bitcoin-marketplace-paxfuls-unraveling"},{"date":"2023-01-01","event":"Artur Schaback files suit against Ray Youssef and Paxful alleging wrongful termination, misappropriation of funds, money laundering, and alleged sanctions-evasion planning regarding Russia.","source":"CoinTelegraph — Co-Founders Litigation","source_url":"https://cointelegraph.com/news/paxful-co-founders-litigation-cites-misappropriation-of-funds-money-laundering-u-s-sanctions-evasion"},{"date":"2023-04-01","event":"Paxful temporarily suspends marketplace operations amid co-founder dispute and concerns about customer fund safety; a Delaware Chancery Court appoints a custodian.","source":"CoinDesk — As Bitcoin Platform Paxful Closes","source_url":"https://www.coindesk.com/tech/2023/04/05/as-bitcoin-platform-paxful-closes-co-founder-youssef-talks-up-alternatives"},{"date":"2023-05-08","event":"Paxful relaunches under new CEO Roshan Dharia after board structure is resolved.","source":"CoinDesk — Paxful Marketplace Back Online","source_url":"https://www.coindesk.com/business/2023/05/08/paxful-marketplace-back-online-following-temporary-suspension"},{"date":"2024-07-08","event":"Artur Schaback pleads guilty in U.S. District Court, California, to conspiracy to fail to maintain an effective AML program. Agrees to pay $5 million in fines and cooperate with ongoing investigation. Faces maximum of five years in prison.","source":"DOJ — Paxful Inc. Co-Founder Pleads Guilty","source_url":"https://www.justice.gov/archives/opa/pr/paxful-inc-co-founder-pleads-guilty-conspiracy-fail-maintain-effective-anti-money-laundering"},{"date":"2025-11-01","event":"Paxful ceases all operations by November 1, 2025, citing lasting impact of former co-founders' misconduct and unsustainable compliance remediation costs.","source":"Paxful Blog — Wind Down Announcement","source_url":"https://paxful.com/blog/paxful-closure-announcement"},{"date":"2025-12-09","event":"Paxful Holdings, Inc. pleads guilty in U.S. District Court, Eastern District of California to three federal conspiracy charges: Travel Act violations, operating an unlicensed MTB, and BSA AML violations. FinCEN concurrently issues $3.5 million civil consent order.","source":"DOJ — Virtual Asset Trading Platform Pleads Guilty","source_url":"https://www.justice.gov/opa/pr/virtual-asset-trading-platform-pleads-guilty-violating-travel-act-and-other-federal-criminal"},{"date":"2025-12-13","event":"Ray Youssef indicted in U.S. District Court, Eastern District of California, on charges of willfully failing to maintain an effective AML program, willfully failing to file SARs, and operating an unlicensed money transmitting business. Youssef is arrested and briefly detained in Santa Ana before being released under supervision.","source":"BeInCrypto — Paxful Founder Indicted","source_url":"https://beincrypto.com/ray-youssef-indicted-doj-paxful-case/"},{"date":"2026-02-10","event":"Paxful Holdings, Inc. is formally sentenced by the U.S. District Court, Eastern District of California to pay a $4 million criminal penalty.","source":"DOJ — Virtual Asset Trading Platform Sentenced","source_url":"https://www.justice.gov/opa/pr/virtual-asset-trading-platform-sentenced-violating-travel-act-and-other-federal-criminal"},{"date":"2026-02-01","event":"Ray Youssef departs as CEO of NoOnes, a separate P2P crypto platform he founded after leaving Paxful. NoOnes states his legal matters are personal and unrelated to the company.","source":"TechPoint Africa — NoOnes Confirms Ray Youssef Is No Longer CEO","source_url":"https://techpoint.africa/news/crypto-exchange-noones-confirms-ray-youssef-is-no-longer-ceo/"}]},"v":1}