Crypto Platform Paxful Fined $4M for Enabling Illicit Transactions

Paxful admitted guilt to federal charges including promoting unlawful prostitution and violating anti-money laundering rules.

Published on Feb. 13, 2026

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Paxful Holdings Inc., a now-defunct peer-to-peer crypto exchange, has been ordered to pay a $4 million criminal fine after admitting guilt to multiple federal charges. Authorities say Paxful deliberately positioned itself as a haven for shady dealings by ignoring essential compliance measures, allowing the platform to become a conduit for laundering money from various crimes.

Why it matters

This case highlights the growing scrutiny on crypto firms amid concerns over their role in facilitating illicit finance. As regulators tighten the reins, platforms like Paxful face mounting pressure to adopt stringent controls or risk shutdowns and penalties.

The details

Between early 2017 and late 2019, Paxful processed over 26.7 million transactions valued at nearly $3 billion, generating about $29.7 million in fees. Officials allege the company was aware that many of these involved proceeds from scams, extortion, and prohibited sex services. A key aspect involves Paxful's ties to Backpage, a notorious online ad site shut down for promoting illegal prostitution, including content involving minors. From 2015 to 2022, the platform transferred around $17 million in bitcoin to Backpage and a similar site, pocketing at least $2.7 million in gains.

  • Paxful was ordered to pay the $4 million fine on February 10, 2026.
  • Paxful co-founder and ex-CTO Artur Schaback admitted guilt in related anti-money laundering lapses in July 2024.

The players

Paxful Holdings Inc.

A now-defunct peer-to-peer virtual asset exchange that was ordered to pay a $4 million criminal fine for enabling illicit transactions.

A. Tysen Duva

Assistant Attorney General of the Justice Department's Criminal Division, who emphasized that Paxful 'profited from funneling money for offenders it lured in by advertising its absence of anti-money laundering safeguards and non-adherence to relevant financial laws.'

Eric Grant

U.S. Attorney for the Eastern District of California, who stated that the penalty serves as accountability for Paxful's choice to prioritize earnings over legal obligations.

Linda Nguyen

Special Agent in Charge of the IRS Criminal Investigation's Oakland Field Office, who said the case demonstrates the agency's resolve to target entities that abuse financial networks for illegal purposes.

Artur Schaback

Co-founder and ex-CTO of Paxful, who admitted guilt in July 2024 to related anti-money laundering lapses.

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What they’re saying

“We must not let individuals continue to damage private property in San Francisco.”

— Robert Jenkins, San Francisco resident (San Francisco Chronicle)

“Fifty years is such an accomplishment in San Francisco, especially with the way the city has changed over the years.”

— Gordon Edgar, grocery employee (Instagram)

The takeaway

This case highlights the growing scrutiny on crypto firms and the need for them to adopt stringent compliance measures to avoid enabling illicit activities. As regulators tighten the reins, platforms that ignore red flags and prioritize profits over legal obligations face severe consequences.