Paxful Pleads Guilty to Criminal Charges for Enabling Illegal Activity, DOJ Says

Bitcoin marketplace Paxful has pleaded guilty to a three-count criminal information, admitting it enabled criminals to move funds tied to illegal activities including prostitution, fraud and sanctions evasion, according to the U.S. Department of Justice. The plea, entered after Paxful waived indictment, confirms the company violated the Travel Act by promoting illegal prostitution, operated an unlicensed money-transmitting business and failed to implement a required anti-money laundering (AML) program under the Bank Secrecy Act.

Prosecutors say Paxful earned millions by ignoring obvious criminal behavior on its platform. Between 2015 and 2019, the exchange processed nearly $3 billion in bitcoin trades and collected more than $29 million in fees. Investigators also uncovered significant links between Paxful and Backpage, a notorious marketplace known for illegal sex work. Roughly $17 million in bitcoin flowed from Paxful to Backpage and another similar platform, with Paxful gaining at least $2.7 million from those transfers.

According to the DOJ, the company not only failed to stop abuse but actively marketed its lack of identity checks and compliance controls to draw in users seeking to avoid detection. Paxful falsified compliance policies, ignored suspicious activity reporting requirements and enabled transactions involving high-risk jurisdictions such as Iran and North Korea.

Although the DOJ initially determined that Paxful’s violations warranted a penalty of $112.5 million, prosecutors reduced the fine to $4 million after reviewing the company’s current financial condition. Acting Assistant Attorney General Matthew R. Galeotti stated that Paxful knowingly attracted criminal clientele by promoting the absence of AML safeguards.

Paxful is scheduled for sentencing in February 2026. Its former CTO, Artur Schaback, previously pleaded guilty to related AML offenses. The case resulted from a joint investigation by the DOJ, IRS Criminal Investigation, Homeland Security Investigations and FinCEN.