Bitcoin marketplace Paxful pleaded guilty Tuesday to three criminal charges, claiming in court that it helped criminals move funds and profit from illegal activities, including prostitution, fraud and evading sanctions.
A “criminal information” is a formal charging document used when a defendant waives the indictment and agrees to plead guilty. In this case, Paxful admitted to violating the Travel Act by promoting illegal prostitution through interstate commerce, operating an unlicensed money transmitting business, and failing to implement an anti-money laundering (AML) program as required by the Bank Secrecy Act, the Department of Justice’s Eastern District of California branch announced in a press release Wednesday.
The DOJ said Paxful made millions by turning a blind eye to crimes committed on its platform. From 2015 to 2019, Paxful processed nearly $3 billion in transactions and collected more than $29 million in fees. The company was also linked to Backpage, an online classifieds site known for illegal sex work. Investigators said nearly $17 million in bitcoin was moved from Paxful to Backpage and a similar site, with Paxful benefiting from at least $2.7 million.
Rather than preventing abuse, prosecutors said Paxful actively marketed its lack of identity and compliance checks to attract users looking to evade detection. The company failed to report suspicious activity, falsified its compliance policies, and facilitated transfers from high-risk jurisdictions, including Iran and North Korea.
Although the DOJ determined that Paxful’s criminal conduct warranted a fine of $112.5 million, that figure was reduced to $4 million after prosecutors assessed the company’s current financial situation, the DOJ said.
“The defendant attracted his criminal clientele by promoting his lack of anti-money laundering controls and his deliberate decision not to identify his clients,” Acting Assistant Attorney General Matthew R. Galeotti said in a statement.
The company will be sentenced in February 2026. Its former chief technology officer, Artur Schaback, also pleaded guilty last year to AML-related violations. The case was part of a joint investigation by the DOJ, the IRS Criminal Investigation Division, Homeland Security Investigations and FinCEN.
