Paxful co-founder Artur Schaback has admitted guilt for failing to implement an effective anti-money laundering (AML) program on the company’s P2P platform.
Paxful Inc. Co-Founder Pleads Guilty to Conspiracy to Fail to Maintain Effective Anti-Money Laundering Program
?: https://t.co/B3DCa5DFQY pic.twitter.com/Zbkgi90dEr
— Criminal Division (@DOJCrimDiv) July 8, 2024
According to court documents, the former executive managed the peer-to-peer cryptocurrency exchange platform and money transfer business as Chief Technology Officer from July 2015 to June 2019. During this period, he:
- allowed clients to open accounts without sufficient KYC procedures;
- marketed Paxful as a platform not requiring verification;
- presented fake AML policies to third parties, knowing the company neither implemented nor adhered to them;
- failed to file any suspicious activity reports despite their occurrence.
“As a result of failing to implement AML and KYC programs, Schaback made Paxful a readily available tool for money laundering, sanctions violations, and other criminal activities, including fraud, romance scams, extortion, and prostitution,” stated the U.S. Department of Justice.
Sentencing is scheduled for November 4, with Schaback facing a maximum penalty of five years in prison. The 36-year-old Estonian will also leave Paxful’s board of directors.
In April 2023, the platform temporarily ceased operations due to a deadlocked legal dispute between co-founders Schaback and Ray Youssef.