U.S. DOJ hits Paxful for $4 million in case tied to illegal sex work, money laundering
The crypto platform's penalty was sharply reduced due to its ability to pay, according to U.S. authorities.
- The U.S. Department of Justice won a $4 million penalty from former crypto platform Paxful in a sentence tied to the dodging of money-laundering laws.
- The amount was reduced from an original amount of $112 million by prosecutors after determining the business couldn't pay that much, the DOJ said.
Paxful Holdings, which pleaded guilty last year to accusations from U.S. authorities that it had fostered illegal prostitution, violated money-laundering laws and knowingly handled criminal proceeds, was sentenced to pay a $4 million penalty, much reduced because of the business’ current ability to pay.
The peer-to-peer bitcoin marketplace that had been popular in Africa shut down in 2023, but Paxful had processed as much as $3 billion in crypto trades from 2017 to 2019, according to U.S. authorities, including transactions for customer Backpage, an advertising platform for illicit sex work.
"This sentence sends a clear message: companies that turn a blind eye to criminal activity on their platforms will face serious consequences under U.S. law," said U.S. Attorney Eric Grant for the Eastern District of California, in a statement.
On the Paxful platform, customers negotiated trades of digital assets for other items, such as cash, prepaid cards and gift cards. The founders were said to have marketed the site as a way around the Bank Secrecy Act's anti-money-laundering constraints.
Prosecutors originally contemplated a penalty of more than $112 million, but the firm was determined to be able to pay no more than $4 million.
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Diversified RWA stablecoins sustain 5-7% yield from real credit as crypto funding compresses to ~4%. GENIUS pushes yield off-chain; TAM grows to $4B in 3 years.
Diversified RWA stablecoins sustain 5-7% yield from real credit as crypto funding compresses to ~4%. GENIUS pushes yield off-chain; TAM grows to $4B in 3 years.
Why it matters:
Diversified RWA stablecoins sustain 5-7% yield from real credit as crypto funding compresses to ~4%. GENIUS pushes yield off-chain; TAM grows to $4B in 3 years.
