Peer-to-peer cryptocurrency marketplace Paxful announced on April 4 that it was suspending operations. Founder and CEO of Paxful, Ray Youssef said in a blog post that “key personnel departures” and the regulatory environment were behind the decision.
“We don’t know if it (the market) will come back,” Youssef wrote. He added that all customer funds are accounted for and asked customers to withdraw their funds. The blog post provided links to other platforms that Paxful suggested non-US users migrate to.
Youssef said in a Twitter Spaces encounter that Paxful is an American company that serves a global audience with a focus on countries in the Global South. He said:
“A quarter of the company were compliance people… Even that wasn’t enough to please Uncle Sam.”
“American regulators have done a great job of catching up (…) for their pace” over the past five years, Youssef added, but “regulators still don’t understand. They become more and more suspicious every day.
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Youssef cited practices such as the use of gift cards to onboard people in Africa without bank accounts as an example of the company’s activities that have drawn regulatory attention in the United States.
If you want to learn the real use cases of #bitcoin turn your attention to Africa! Young people lead the way pic.twitter.com/CZWcXxXf5O
— Ray Youssef (@raypaxful) March 28, 2023
Blocking American customers and continuing operations “would have been an option if we had had the staff. (…) Commercially, it doesn’t make sense,” Youssef said.
In addition to its issues with staff departures, the company is in a legal dispute with co-founder and chief operating officer Artur Schaback, who sued the company in January, naming Youssef and Jude Chidi Ogene as defendants. Ogene was Paxful’s chief legal officer until March, according to his LinkedIn profile. The complaint in this case was sealed.
Paxful announced on March 29 that the company was reimbursing its Earn program users for funds that had been locked up in Celsius after its bankruptcy “in the coming days.”
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