Paxful sentenced to $4 million over money laundering and sex trafficking-linked transactions

Peer-to-peer Bitcoin exchange Paxful has been ordered by a U.S. federal court to pay $4 million in criminal fines after pleading guilty to multiple charges, including facilitating money laundering, fraud, prostitution, and sex trafficking-related transactions.

In a plea agreement reached in December with the Department of Justice (DOJ) and the U.S. Treasury Department, Paxful admitted it knowingly transferred funds tied to money laundering schemes, fraud, prostitution, and commercial sex trafficking.

According to the DOJ, Paxful facilitated approximately $3 billion in trades between 2017 and 2019, generating nearly $30 million in revenue during that period.

Authorities said Paxful processed Bitcoin transactions on behalf of clients including Backpage, a website known for prostitution advertisements that profited from illegal sex work involving minors. The DOJ stated that Paxful’s founders at one point touted the “Backpage Effect” and its positive impact on the company’s business.

“By putting profit over compliance, the company enabled money laundering and other crimes,” said U.S. Attorney Eric Grant. “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.”

As part of the plea deal, Paxful acknowledged that an appropriate criminal penalty would exceed $112 million. However, the DOJ determined the company was unable to pay more than $4 million, and a federal judge approved the reduced fine during Tuesday’s sentencing hearing.

In addition to the criminal penalty, Paxful agreed to pay a $3.5 million civil fine to the Treasury’s Financial Crimes Enforcement Network (FinCEN).

Paxful shut down operations in 2023. In 2024, its co-founder Artur Schaback of Estonia pleaded guilty to violating U.S. anti-money laundering laws.