Paxful Holdings has agreed to a $4 million criminal settlement after federal prosecutors said the parent company of the now-defunct bitcoin marketplace allowed its platform to become a conduit for unlawful transactions tied to crimes ranging from illegal prostitution to distribution of child sexual abuse material. The agreement, filed Monday in California federal court, concludes claims that Paxful ignored anti-money laundering laws while operating its peer-to-peer crypto exchange.
Federal prosecutors charged the company with three conspiracy counts in October, accusing Paxful of willfully failing to maintain an effective anti–money laundering program, running an unlicensed money-transmitting business, and violating the Travel Act.
FinCEN Adds $3.5M Civil Penalty in Parallel Case
On Tuesday, the U.S. Treasury’s Financial Crimes Enforcement Network announced a separate $3.5 million civil fine against Paxful Inc. and Paxful USA. In that consent order, Paxful admitted to flouting the Bank Secrecy Act by failing to register as a money services business, neglecting to implement AML controls, and filing inadequate suspicious activity reports.
FinCEN said Paxful facilitated transactions tied to ransomware operations, darknet marketplaces, terrorist financing, unregistered MSBs, elderly fraud schemes, stolen funds, and other illicit proceeds.
