The US Treasury’s Financial Crimes Enforcement Network (FinCEN) has fined peer-to-peer crypto marketplace Paxful $3.5 million.
Key Takeaways:
FinCEN fined Paxful $3.5M for willfully enabling over $500M in suspicious crypto transfers. Regulators said Paxful ignored basic AML rules, including MSB registration and SAR filings. Paxful later shut down amid regulatory pressure, staff losses, and internal legal disputes.The regulator accused the company of willfully violating federal anti-money laundering laws and allowing more than $500 million in suspicious transfers linked to high-risk jurisdictions and criminal activity.
According to FinCEN, Paxful facilitated transactions tied to Iran, North Korea, Venezuela, and even Backpage.com, the notorious classifieds site seized in 2018 for enabling sex trafficking.
FinCEN Says Paxful Ignored Basic Anti–Money Laundering Rules
Regulators said Paxful failed to implement even the most basic requirements of the Bank Secrecy Act (BSA), including registering as a money services business, maintaining an anti-money-laundering program, and filing suspicious activity reports.
“For years, Paxful disregarded its BSA obligations and facilitated transactions associated with illicit activity and high-risk jurisdictions,” FinCEN Director Andrea Gacki said.
Paxful acknowledged that it willfully violated federal law. The consent order highlights major compliance lapses during the years in which Paxful operated without adequate oversight, largely due to failures by former leadership.
FinCEN said the company has since taken steps to correct past misconduct, including firing senior figures responsible for the violations and conducting an internal review to identify suspicious activity previously left unreported.
Regulators from multiple federal agencies assisted in the case, including the Justice Department’s Money Laundering and Narcotics section, the US Attorney’s Office for the Eastern District of California, and Homeland Security Investigations.
The agency emphasized that firms involved in digital assets must adjust their controls to match the risks inherent in dealing with crypto, especially exposure to sanctioned jurisdictions and anonymous transfers.
In 2023, Paxful shut down its peer-to-peer crypto marketplace, citing the broader industry downturn, regulatory pressure, and internal turmoil.
CEO Ray Youssef cited multiple factors behind the shutdown, including major staff departures, increasingly burdensome US regulatory requirements, and a lawsuit filed by a co-founder, reportedly Artur Schaback.
He said compliance demands had grown so intense that even dedicating a quarter of Paxful’s workforce to compliance was not enough.
The company also lacked the resources to continue operating while blocking US users, making a full marketplace suspension unavoidable.
B.C. Seizes Over $1M in Gold, Cash Linked to QuadrigaCX Co-Founder
As reported, British Columbia has secured a major legal victory after obtaining a court order to seize more than $1 million in gold, cash, and luxury goods tied to QuadrigaCX co-founder Michael Patryn.
The forfeiture comes under the province’s unexplained wealth order regime, which requires individuals to prove their assets were acquired lawfully.
Patryn chose not to contest the action, allowing authorities to move forward with liquidating the seized items.
The seized assets were discovered in a Vancouver safety deposit box and included 45 gold bars, luxury watches, jewelry, and a loaded .45-caliber pistol.
At today’s prices, the gold alone is worth over $800,000. The province’s civil forfeiture office alleges these items were purchased using misappropriated QuadrigaCX customer funds, citing evidence gathered during a broader RCMP investigation.
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