The Bitcoin marketplace admitted to facilitating illicit activities, including prostitution and sanctions evasion, and faces a $4 million penalty with sentencing in 2026.
Paxful pleaded guilty to a three-count criminal information, admitting it facilitated prostitution, fraud, sanctions violations, and operated without an anti-money laundering (AML) program as required by the Bank Secrecy Act. The U.S. Department of Justice (DOJ) said the platform processed nearly $3 billion in crypto trades between 2015 and 2019, earning over $29 million in fees and profiting by at least $2.7 million from transfers to sites such as Backpage, known for illegal sex work. Prosecutors alleged Paxful marketed its lack of compliance to attract high-risk users from jurisdictions including Iran and North Korea. While a $112.5 million penalty was originally determined, it was reduced to $4 million due to the company's financial condition. Sentencing is scheduled for February 2026. Former CTO Artur Schaback previously pleaded guilty to related violations. The case was part of a joint investigation by the DOJ, IRS Criminal Investigation division, Homeland Security Investigations, and FinCEN.