Paxful Holdings Inc. was sentenced to pay $4 million after prosecutors say the crypto trading platform profited from a lack of anti-money laundering controls that allowed criminals to move illicit funds tied to fraud, prostitution and sex trafficking.
Prosecutors said Paxful knew that its customers transferred funds from crimes, like prostitution, according to a statement released by the Department of Justice on Wednesday.
“Paxful profited from moving money for criminals that it attracted by touting its lack of anti-money laundering controls and failure to comply with applicable money-laundering laws, all while knowing that these criminals were engaged in fraud, extortion, prostitution and commercial sex trafficking,” said Assistant Attorney General A. Tysen Duva of the Justice Department’s criminal division in the statement.
Paxful also knew it was transferring crypto for its customers, including Backpage, prosecutors said. Backpage is a website often used by traffickers to post ads for prostitution, which includes minors.
Between 2015 and 2022, Paxful’s business with Backpage and another similar site resulted in about $17 million worth of bitcoin that was transferred from a Paxful wallet to Backpage and the other site. Paxful then got at least $2.7 million in profits, prosecutors said.
The Justice Department said Paxful’s founders even referred to the growth driven by such activity as the “Backpage Effect.”
Last year, Paxful Inc. co-founder Artur Schaback pleaded guilty to charges of deliberately failing to establish and maintain an effective anti-money laundering program and also falsely told users that the platform did not require know your customer.
Paxful pleaded guilty in December. The company suspended its operations in 2019.
Originally, the DOJ said Paxful was set to pay over $112 million, but didn’t have the money.
“Based on the Justice Department’s independent analysis, it determined that Paxful did not have the ability to pay a criminal penalty greater than $4 million,” according to the statement.
© 2026 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
Trade Crypto On Coinhub Exchange
Trade Crypto On Coinhub Exchange
Stay ahead of the market by turning news insights into trading opportunities. With Coinhub Exchange, you can seamlessly buy, sell, and manage your digital assets, all in one secure platform. Take advantage of real-time market insights, deep liquidity, and fast execution for your favorite cryptocurrencies. Don’t just read about it — trade crypto now!
Disclaimer
The content of this article shown by Coinhub News, powered by The Block, is for informational purposes only and should not be construed as financial, legal, tax, or investment advice. Coinhub News and its affiliates are not a licensed financial advisor, legal advisor, broker, or tax advisor, and ... should not be considered as professional advice or a recommendation to engage in any specific investment, legal decision, or financial transaction. Cryptocurrency markets are highly speculative and volatile. Readers should perform their own independent research and consult with a qualified professional before making any financial or legal decisions. The opinions expressed in this article are those of the author and do not necessarily represent the views or opinions of the Company of its affiliates. Additionally, the Company does not make any representations or warranties regarding the accuracy, timeliness, reliability, or completeness of any information in this article. By accessing this content, you acknowledge that any reliance on the information contained in this article is solely at your own risk. The Company is not responsible for any financial losses, legal disputes, or other damages that may arise from reliance on this content or from any investment or legal decisions based on the information provided. Investing in cryptocurrencies involves substantial risks, including the risk of losing your entire investment, and you should carefully consider whether it is appropriate for your circumstances.
Read more
