Bitcoin Exchange Paxful Must Pay $4 Million Over Prostitution, Money Laundering Charges

Paxful, the peer-to-peer Bitcoin exchange that closed in 2023, was sentenced this week by a federal court to pay $4 million in fines after pleading guilty to multiple criminal charges.

The company reached a plea agreement with the Department of Justice and the Treasury Department in December, admitting to knowingly transferring funds implicated in money laundering, fraud, and prostitution, and commercial sex trafficking schemes.

The company facilitated some $3 billion in trades between 2017 and 2019, according to the Department of Justice, and collected nearly $30 million in revenue from that business.



Paxful knowingly transferred Bitcoin on behalf of clients including Backpage, a website for prostitution ads that profited from illegal sex work involving minors. Paxful’s founders, at one point, bragged about the “Backpage Effect” and its positive effect on Paxful’s business, according to the Department of Justice.

“By putting profit over compliance, the company enabled money laundering and other crimes,” Eric Grant, a U.S. attorney involved in the case, said Wednesday. “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 its plea deal, Paxful admitted that the appropriate criminal penalty for its crimes would be in excess of $112 million. But the Department of Justice determined the company would not be able to pay a penalty greater than $4 million. A federal judge affirmed the $4 million fine during a sentencing hearing on Tuesday.

Paxful has also agreed to pay a $3.5 million civil penalty to FinCEN, a bureau of the Treasury Department, for its conduct. In 2024, Paxful’s co-founder, Artur Schaback of Estonia, pleaded guilty to violating U.S. anti-money laundering laws.