Peer-to-peer Bitcoin exchange Paxful has been ordered by a federal court to pay $4 million in criminal fines after pleading guilty to money laundering, fraud and prostitution-related offences.
The company admitted facilitating transactions tied to commercial sex trafficking and illegal activity, agreeing in a December plea deal with the Department of Justice and the Treasury Department that its conduct warranted a $112 million penalty.
However, the Department of Justice reduced the fine to $4 million after determining Paxful could not afford to pay the full amount, with a federal judge affirming the lower penalty at sentencing this week.
According to prosecutors, Paxful facilitated around $3 billion in trades between 2017 and 2019 and generated nearly $30 million in revenue, including knowingly transferring Bitcoin for clients such as Backpage, a website linked to illegal prostitution involving minors.
“By putting profit over compliance, the company enabled money laundering and other crimes,”
Said Eric Grant, a U.S. attorney involved in the case.
“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.”
Following the announcement the Paxful share price was unchanged at $XX.
Paxful, which shut down in 2023, also agreed to pay a $3.5 million civil penalty to the Treasury’s Financial Crimes Enforcement Network for anti-money laundering failures tied to its operations.
In a related development, Paxful co-founder Artur Schaback of Estonia pleaded guilty in 2024 to violating U.S. anti-money laundering laws, marking another chapter in the enforcement action against the once-prominent Bitcoin marketplace.
At the time of reporting, Bitcoin price was $66,992.62.