Peer-to-peer cryptocurrency marketplace Paxful announced on April 4 that it was suspending operations. Paxful founder and CEO Ray Youssef said in a blog that “key staff departures” and the regulation environment were behind the decision.
“We are not sure if it [the marketplace] 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 for non-U.S. users to migrate to.
Youssef said in a Twitter Spaces meetup that Paxful is an American company that serves a global audience with a concentration on the global south. He said:
“A quarter of the company was compliance people […] Even that was not enough to please Uncle Sam.”
“American regulators have done a great job catching up […] for their pace” in the last five years, Youssef added, but “the regulators still don’t get it. They grow more suspicious every day.”
Youssef pointed to practices such as using gift cards to onboard people in Africa without bank accounts as an example of the company’s activities that drew regulatory attention in the United States.
Blocking U.S. customers and continuing operations “would have been an option if we had the staff. […] Business-wise it doesn’t make sense,” Youssef said.
In addition to its problems with staff departures, the company is in a legal dispute with co-founder and former 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 that case has been sealed.
Paxful announced on March 29 that the company was refunding its Earn program users the funds that had been locked up in Celsius after its bankruptcy “in the coming days.”