Paxful Holdings, which pleaded guilty last year to accusations by U.S. authorities that it had encouraged illegal prostitution, violated money laundering laws and knowingly managed criminal proceeds, was sentenced to pay a $4 million fine, greatly reduced given the company’s current ability to pay.
The peer-to-peer bitcoin The marketplace that had been popular in Africa closed in 2023, but Paxful had processed up to $3 billion in cryptocurrency exchanges between 2017 and 2019, according to U.S. authorities, including transactions for client 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 American law,” said US Attorney Eric Grant for the Eastern District of California, in a statement.
On the Paxful platform, customers negotiated exchanges 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 to circumvent the anti-money laundering restrictions of the Bank Secrecy Act.
Prosecutors originally contemplated a fine of more than $112 million, but it was determined that the firm could not pay more than $4 million.
Read more: The fall of Paxful: questions about the demise of peer-to-peer Bitcoin trading
