Paxful Holdings Inc., the peer-to-peer Bitcoin exchange that shut down in 2023, has agreed to plead guilty to three federal criminal charges and pay a $4 million criminal fine to the U.S. Department of Justice. FinCEN also issued a $3.5 million civil penalty on the same day, bringing the total penalties to $7.5 million. The Department of Justice stated that Paxful facilitated approximately $3 billion in transactions and earned over $29 million in revenue between 2017 and 2019, knowingly using its platform for fraud, extortion, money laundering, and illegal sex trafficking, and attracting illegal users by highlighting a "lack of anti-money laundering controls." Investigations revealed that Paxful provided transaction services to Backpage, an illegal sex trafficking platform that was shut down in 2018. Between 2015 and 2022, approximately $17 million worth of Bitcoin flowed from Paxful to Backpage and similar websites, generating at least $2.7 million in profits for Paxful. Its founding team even internally celebrated the so-called "Backpage effect." Paxful also processed suspicious transactions involving sanctioned countries such as Iran, North Korea, and Venezuela, totaling over $500 million, and consistently failed to submit required suspicious activity reports, while also misleading the public about its anti-money laundering measures. The Department of Justice stated that, based on sentencing guidelines, Paxful should have been fined $112.5 million, but considering its actual ability to pay and subsequent cooperation with the investigation, the final criminal fine was determined to be $4 million. The company will face final sentencing on February 10, 2026. Notably, Paxful co-founder and former CTO Artur Schaback pleaded guilty to the charges in July 2024. (Decrypt)