Co-founder of Paxful admits guilt to AML conspiracy allegations, faces potential incarceration.
Paxful, a popular peer-to-peer cryptocurrency marketplace, has resumed operations following a month-long hiatus in May 2023. Despite a recent scandal involving one of its co-founders, Artur Schaback, the company continues to operate with a strong regulatory standing.
Schaback, who served as the former CTO of Paxful Inc., pleaded guilty to conspiracy charges related to failures in maintaining an effective anti-money laundering (AML) program. According to court documents, he marketed Paxful as a platform that didn't require know-your-customer (KYC) checks, presented fake AML policies to third parties, and failed to file any suspicious activity reports despite knowledge of criminal activities on the platform.
Despite these allegations, Paxful has managed to maintain a high security rating of 9.75/10. The company adheres to stringent financial oversight from Tier-1 financial authorities such as those in the US, UK, Germany, and other jurisdictions with stringent financial oversight. Paxful also employs secure features like two-factor authentication (2FA), cold wallet storage, and geolocation locking of accounts to comply with OFAC sanctions, restricting users in certain sanctioned countries from accessing the platform.
Paxful's new CEO, Roshan Dharia, was appointed in June 2023, initially in an interim capacity. Dharia, a seasoned executive from TrustToken, has since been confirmed as the permanent CEO. Under his leadership, significant improvements have been made to compliance processes, including KYC, monitoring, reporting, and sanctions screening.
It's worth noting that Schaback had no role in Paxful's day-to-day operations for over a year before his resignation. The Department of Justice (DOJ) has not commented on whether other former Paxful executives will face similar charges. Paxful's operations were suspended in April 2023 due to regulatory challenges and key staff departures, but the company has since made a comeback.
The platform operates in multiple regions, including the USA (depending on state regulations), and is expected to seek regulatory licenses in Africa, particularly in Kenya, which is putting in place formal virtual asset service provider licensing frameworks. Paxful's domain and interface remain stable and active, supporting over 300 payment methods for buying and selling Bitcoin globally.
In summary, Paxful continues to operate as a legally compliant and regulated platform in 2025, upholding regulatory requirements and security protocols to maintain trust and functionality within the cryptocurrency market. The company's resilience in the face of challenges serves as a testament to its commitment to maintaining a secure and compliant environment for its users.
[1] Paxful Press Release, July 9, 2023. [2] OFAC Sanctions, Paxful Compliance Policies. [3] Paxful Support, Payment Methods. [4] Kenyan Government Press Release, Virtual Asset Service Provider Licensing Framework.
- Paxful, now led by Roshan Dharia, is looking to expand its operations in Africa, specifically in Kenya, by seeking regulatory licenses for digital asset trading, aligning with the country's emerging virtual asset service provider licensing frameworks.
- Despite the recent scandal involving former co-founder Artur Schaback and his guilty plea for AML program failures, Paxful has maintained a high security rating, employing measures like two-factor authentication, cold wallet storage, and geolocation locking of accounts to comply with OFAC sanctions.
- In response to the challenges facing the platform in 2023, Paxful has taken significant steps to improve its compliance processes under the leadership of CEO Roshan Dharia, focusing on KYC, monitoring, reporting, and sanctions screening, thereby positioning itself as a legally compliant and regulated cryptocurrency marketplace in 2025.
