Paxful Admits Guilt in US Case Over Illicit Crypto Transactions

Paxful Holdings Inc., once known for running a major peer-to-peer crypto trading platform, has pleaded guilty in a US federal court over its role in facilitating illegal activity. The plea was filed on Dec. 10, 2025, in the Eastern District of California, following a long investigation by the US Department of Justice and other regulators .

Prosecutors said Paxful allowed its platform to be used for money laundering, fraud, and prostitution-related payments. As part of the agreement, the company will pay a $4 million criminal fine. Although federal guidelines suggested a penalty above $112 million, officials reduced the amount after reviewing the firm’s finances. The court has scheduled sentencing for Feb. 10, 2026.

How Paxful’s Platform Was Used

Between 2017 and 2019, Paxful processed more than 26.7 million crypto trades worth nearly $3 billion. During that time, the platform generated around $29 million in revenue. However, regulators said Paxful failed to put basic compliance systems in place.

According to court records, the company attracted bad actors by promoting limited identity checks and weak anti-money-laundering controls. As a result, criminals used the platform for a wide range of schemes, including:

• Crypto transfers linked to fraud and extortion scams
• Payments tied to online prostitution networks
• Transactions involving sanctioned regions such as Iran and North Korea

One case highlighted about $17 million in Bitcoin linked to Backpage and similar websites.

Charges and Broader Impact

The guilty plea covers three federal offenses. These include operating an unlicensed money transmission business, failing to maintain an effective AML program, and conspiring to promote illegal prostitution through interstate commerce. Prosecutors also said Paxful ignored clear warning signs and failed to file required suspicious activity reports.

Furthermore, former Paxful executives, including co-founder Artur Schaback, have already pleaded guilty in related cases. DOJ officials stressed that crypto platforms cannot avoid responsibility by claiming to protect user privacy.

As US regulators tighten oversight, the Paxful case serves as a clear warning. Crypto companies that ignore compliance rules may still face serious consequences, even years later.