Court reduces Paxful platform’s fine from $112 million to $4 million., 2026/02/12 10:40:33

A federal court in California has reduced the penalty for Paxful Holdings, the operator of the P2P platform Paxful, from $112 million to $4 million. The company admitted to violating anti-money laundering (AML) regulations.

Initially, the U.S. Department of Justice sought to impose a fine of $112 million. However, after reviewing the company’s financial situation, the prosecution concluded that Paxful could only afford to pay a maximum of $4 million.

According to the allegations, from 2017 to 2019, the platform processed transactions totaling approximately $3 billion and generated profits of around $30 million. Paxful also provided services to Backpage, a site that hosted advertisements for sexual services, including illegal activities involving minors.

Between 2015 and 2022, approximately $17 million in Bitcoin was transferred from Paxful’s corporate wallets to Backpage and similar platforms. The Department of Justice reported that the company earned at least $2.7 million in profits from these transactions while failing to adhere to AML requirements. In internal communications, the founders linked the increase in turnover to the “Backpage effect.”

Prosecutor Eric Grant stated that Paxful attracted customers by promoting the absence of identification procedures (KYC) and the ability to circumvent the Bank Secrecy Act requirements. He emphasized that the reduction in the penalty was solely due to the company’s financial condition.

Paxful ceased operations in 2023 amid a dispute between co-founders Artur Schaback and Ray Youssef. In 2024, Schaback admitted guilt in violating U.S. anti-money laundering laws.