Crypto: Us Fines Paxful $4m For Moving Funds Tied To Trafficking, Fraud
US prosecutors said Paxful marketed itself as a non-KYC platform and presented anti-money laundering policies that it knew “were not implemented or enforced.”
Peer-to-peer crypto exchange Paxful has been ordered to pay $4 million after admitting it knowingly profited from criminals who used its platform because of its lack of anti-money laundering checks.
The Justice Department said on Wednesday that Paxful was sentenced to pay the fine after pleading guilty in December to conspiring to promote illegal prostitution, knowingly transmitting funds derived from crime and violating anti-money laundering requirements.
“Paxful profited from moving money for criminals that it attracted by touting its lack of anti-money laundering controls and failure to comply with applicable money-laundering laws, all while knowing that these criminals were engaged in fraud, extortion, prostitution and commercial sex trafficking,” said Andrew Tysen Duva, the assistant attorney general of the Justice Department’s Criminal Division.
Prosecutors said that from January 2017 to September 2019, Paxful facilitated over 26 million trades worth nearly $3 billion in value and collected more than $29.7 million in revenue.
The Justice Department said Paxful had agreed that the appropriate criminal penalty was $112.5 million, but prosecutors determined the company couldn’t pay more than $4 million.
The Justice Department said Paxful marketed itself as a platform that didn’t require customer information and presented fake anti-money laundering policies that it knew “were not implemented or enforced.”
According to prosecutors, one of Paxful’s customers was the classified advertising site Backpage, which authorities shut down due to hosting ads for illegal prostitution.
“Paxful’s founders boasted about the ‘Backpage Effect,’ which enabled the business to grow,” the Justice Department said, adding that Paxful’s collaboration with Backpage and a similar site between 2015 and 2022 saw the crypto platform earn $2.7 million in profits.
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Source: CoinTelegraph
