Paxful Holdings Inc., an online virtual currency platform, pleaded guilty to federal criminal charges, including violations of the Travel Act, and agreed to pay a $4 million penalty. Acting Assistant Attorney General Matthew R. Galeotti said, "The defendant attracted its criminal clientele by promoting its lack of anti-money laundering controls and its deliberate decision not to identify its customers." The platform handled transactions linked to high-risk jurisdictions like Iran and North Korea. Financial Crimes Enforcement Network Director Andrea Gacki stated, "For years, Paxful disregarded its Bank Secrecy Act obligations and facilitated transactions associated with illicit activity and high-risk jurisdictions," according to the U.S. Attorney's Office.
Linda Nguyen, Special Agent in Charge with the IRS Criminal Investigation unit, said, "By willfully disregarding anti-money laundering laws and failing to report suspicious activity, Paxful profited in illicit trades while facilitating crimes with serious harm and consequences." Court documents show that between January 1, 2017, and September 2, 2019, Paxful handled over 26.7 million trades worth nearly $3 billion and earned more than $29.7 million in revenue. The company also partnered with Backpage, a site linked to illegal prostitution, adding about $17 million in bitcoin transactions. Paxful’s founders called this partnership the "Backpage Effect," as reported by the U.S. Attorney's Office.
Paxful pleaded guilty to promoting illegal prostitution, running an unlicensed money transmitting business, and breaking anti-money laundering rules. Co-founder Artur Schaback also pleaded guilty to related charges on July 8, 2024. The company’s sentencing is scheduled for February 10, 2026, as stated by the U.S. Attorney's Office.
