Paxful Holdings, which pleaded guilty last year to accusations from U.S. authorities that it had fostered illegal prostitution, violated money-laundering laws and knowingly handled criminal proceeds, was sentenced to pay a $4 million penalty, much reduced because of the business’ current ability to pay.
The peer-to-peer bitcoin marketplace that had been popular in Africa shut down in 2023, but Paxful had processed as much as $3 billion in crypto trades from 2017 to 2019, according to U.S. authorities, including transactions for customer Backpage, an advertising platform for illicit sex work.
“This sentence sends a clear message: companies that turn a blind eye to criminal activity on their platforms will face serious consequences under U.S. law,” said U.S. Attorney Eric Grant for the Eastern District of California, in a statement.
On the Paxful platform, customers negotiated trades of digital assets for other items, such as cash, prepaid cards and gift cards. The founders were said to have marketed the site as a way around the Bank Secrecy Act’s anti-money-laundering constraints.
Prosecutors originally contemplated a penalty of more than $112 million, but the firm was determined to be able to pay no more than $4 million.
Read More: Paxful’s Fall: Questions in the Peer-to-Peer Bitcoin Exchange’s Demise