Overview
- Paxful was sentenced after admitting conspiracies tied to promoting illegal prostitution under the Travel Act, operating an unlicensed money transmitting business, violating the Bank Secrecy Act, and transmitting criminal proceeds.
- The Justice Department reduced an agreed $112.5 million penalty to $4 million based on an independent ability-to-pay review that the court accepted.
- The resolution was coordinated with Treasury’s FinCEN, which Paxful agreed to pay $3.5 million in a civil penalty for BSA/AML violations.
- Court records say Paxful facilitated nearly $17 million in bitcoin transfers to Backpage and a similar site, profiting at least $2.7 million as founders touted the “Backpage Effect.”
- From 2017 to 2019 the platform processed about 26.7 million trades worth nearly $3 billion while marketing lax KYC, faking AML policies, and failing to file SARs; co-founder Artur Schaback pleaded guilty in 2024 in the related probe.