Bitcoin marketplace Paxful pleaded guilty to a three-count criminal information on Tuesday, saying in court that it helped criminals move money and profit from illegal activity, including prostitution, fraud and sanctions evasion.
A “criminal information” is a formal charging document used when a defendant waives charges and agrees to plead guilty. In this case, Paxful admitted to violating travel law by promoting illegal prostitution through interstate commerce, operating an unlicensed money transmission 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 division announced in a press release Wednesday.
The DOJ said Paxful made millions by turning a blind eye to crimes happening on its platform. From 2015 to 2019, Paxful processed nearly $3 billion in trades and collected over $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 moved from Paxful to Backpage and a similar site, with Paxful profiting by at least $2.7 million.
Instead of preventing abuse, prosecutors said Paxful actively marketed its lack of identity and compliance controls to attract users who wanted to avoid detection. The company failed to report suspicious activity, falsified its compliance policies and facilitated transfers from high-risk jurisdictions, including Iran and North Korea.
While the DOJ determined that Paxful’s criminal conduct warranted a $112.5 million fine, 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 related AML violations. The case was part of a joint investigation by the DOJ, the IRS’s Criminal Investigation division, Homeland Security Investigations and FinCEN.
