Paxful pleads guilty to illegal activity, fined $4 million

Bitcoin marketplace Paxful pleaded guilty to three criminal charges, admitting it helped criminals move funds and profit from illegal activities including prostitution, fraud, and sanctions evasion. The DOJ announced that from 2015 to 2019, Paxful processed nearly $3 billion in crypto trades and collected over $29 million in fees while failing to comply with anti-money laundering (AML) regulations.

Investigators linked Paxful to Backpage, a classified website notorious for illegal sex work, noting that nearly $17 million in Bitcoin moved from Paxful to Backpage and similar sites, with Paxful profiting at least $2.7 million. Rather than prevent abuse, the platform actively marketed its lack of identity checks and compliance controls to attract users seeking to evade detection.

The initial $112.5 million penalty was reduced to $4 million after prosecutors assessed Paxful’s financial situation. Sentencing is scheduled for February 2026. Previously, Paxful’s former CTO, Artur Schaback, also pleaded guilty to related AML violations.