The peer-to-peer Bitcoin exchange Paxful has been sentenced to pay $4 million in criminal fines. The company pleaded guilty to facilitating transactions linked to money laundering, fraud, and sex trafficking. According to the Department of Justice, Paxful processed approximately $3 billion in trades from 2017 to 2019. The fine was significantly reduced from a potential $112 million penalty due to the company’s inability to pay.
The peer-to-peer Bitcoin exchange Paxful was sentenced this week to pay $4 million in criminal fines. The company had reached a plea agreement in December, admitting to transferring funds for money laundering, fraud, prostitution, and sex trafficking schemes.
Paxful facilitated roughly $3 billion in trades between 2017 and 2019 according to the Department of Justice. The company generated nearly $30 million in revenue from that business during that period.
Court documents state the company knowingly transferred Bitcoin for clients including Backpage, a website for prostitution ads that profited from illegal sex work involving minors. Paxful founders bragged about the “Backpage Effect” and its positive impact on business.
Eric Grant, a U.S. attorney involved in the case, said Wednesday that the company put profit over compliance. “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,” Grant stated.
Paxful admitted that the appropriate criminal penalty for its crimes would exceed $112 million. The Department of Justice reduced the fine to $4 million after determining the company could not pay a larger amount.
Paxful has also agreed to pay a $3.5 million civil penalty to FinCEN. In 2024, Paxful’s co-founder Artur Schaback pleaded guilty to violating U.S. anti-money laundering laws.
