Paxful to pay $7.5M after DOJ finds platform enabled criminal transactions
The post Paxful to pay $7.5M after DOJ finds platform enabled criminal transactions appeared on BitcoinEthereumNews.com.
Cryptocurrency peer-to-peer marketplace Paxful has agreed to pay a total of $7.5 million in penalties after admitting that it facilitated a massive volume of illicit financial activity, including money laundering, fraud, and illegal prostitution, via its platform. The resolution follows coordinated enforcement efforts by the U.S. Department of Justice (DOJ) and the Financial Crimes Enforcement Network (FinCEN). Under the agreement, Paxful will pay $4 million in criminal fines to the DOJ and $3.5 million in civil penalties to FinCEN, totaling $7.5 million. The Department of Justice claimed that this fine acts as a warning to those with similar intentions to Paxful. The trading platform managed approximately $3 billion in trades over the period from 2017 to 2019. At this time, it generated more than $29 million in revenue while engaging in activities that were intentionally illegal. Paxful’s illegal activities cause tension in the industry Before shutting down its operations, Paxful served as a peer-to-peer exchange, allowing users to exchange Bitcoin and other cryptocurrencies for prepaid cards, cash, and gift cards. Acting Assistant Attorney General Matthew R. Galeotti from the Justice Department’s Criminal Division alleged that during this time, “Paxful earned millions by intentionally moving cryptocurrency for criminals like fraudsters, extortionists, money launderers, and those involved in prostitution.” According to Galeotti, the firm drew the attention of these criminals after it established weak anti-money laundering measures and its decision not to identify its clients. Following this claim, sources reported that Paxful managed Backpage’s transactions. This unlawful online advertising website promoted prostitution, prompting federal authorities to seize and shut it down in April 2018. What captured the attention of these federal authorities was the discovery that about BTC worth $17 million were transferred from Backpage and similar websites, yielding profits of at least $2.7 million for Paxful from 2015 to 2022. Reporters highlighted…
