DOJ Indicts Paxful Founder Days After Company Pleads Guilty to Money Laundering Charges
NoOnes founder Ray Youssef is being investigated by the US Department of Justice (DOJ). The probe facilities on allegations that Youssef’s peer-to-peer crypto market, Paxful, operated with out correct licensing and failed to implement efficient anti-money laundering (AML) controls earlier than it shut down in 2025.
Prosecutors additionally claimed Paxful facilitated transactions linked to illegal actions, together with funds tied to business intercourse promoting platforms. Youssef disputed the allegations, arguing the transfer represents an extra continuation of the battle on crypto.
Prosecutors Cite Years Of Compliance Gaps
Federal prosecutors have charged Youssef within the US District Court for the Eastern District of California. The indictment focuses on his function as co-founder and former CEO of Paxful.
According to court docket paperwork obtained by BeInCrypto, prosecutors alleged that Paxful lacked sufficient Know Your Customer procedures and significant inner compliance controls. Authorities additional alleged the platform didn’t well timed file Suspicious Activity Reports as required underneath federal legislation.
Authorities additionally claimed Paxful facilitated transactions linked to illegal on-line enterprises, together with business intercourse promoting platforms.
The indictment cited particular, dated Bitcoin transfers that prosecutors say have been despatched from Paxful wallets to addresses linked to Backpage, a web-based platform accused of facilitating unlawful business intercourse promoting.
Youssef has strongly rejected the fees in a collection of social media posts.
Youssef Publicly Rejects Criminal Allegations
In a video uploaded to his X account, Youssef claimed that he was in Mexico when authorities deported him to Los Angeles, underneath orders from the DOJ. He was subsequently arrested and despatched to a jail in Santa Ana till a decide ordered his launch underneath supervision following his arraignment. Until the case’s decision, Youssef can not depart the United States.
Youssef described the fees as “bogus” and claimed that the case largely rests on roughly $240 price of Bitcoin transactions.
According to the indictment, Paxful embedded a “Pay with Paxful” button straight on Backpage, permitting customers to purchase Bitcoin by means of Paxful and use it to pay for advertisements on the positioning.
It additional said that undercover federal brokers opened Paxful accounts and efficiently accomplished these transactions, which prosecutors cited as proof that the fee system actively facilitated associated exercise.
For Youssef, the situation reinforced his belief that the battle on crypto by no means stopped current. Instead, it simply turned extra selective.
“If you have been doing a token like our president, and retail misplaced a pair billion, effectively that’s fantastic. If you’re like CZ and offered a few hundred billion by liquidations and price manipulation, effectively that’s fantastic. If you simply stole cash from retail, nobody cares. Go forward,” Youssef stated in an X video.
The newest occasions come at a troublesome time for Youssef’s function in several crypto tasks.
Paxful To Pay Million-Dollar Fine
Last week, NoOnes introduced on social media that Youssef was not the corporate’s CEO. It additionally clarified that the authorized issues he at present faces are “private and unrelated to” the corporate’s choice.
Four days earlier than the DOJ indicted Youssef, Paxful pleaded guilty to three federal prison expenses associated to Backpage.
According to court docket paperwork, Paxful admitted it conspired to promote unlawful prostitution by means of interstate commerce, operated as an unlicensed cash switch enterprise, and failed to put correct anti-AML controls in place.
In July 2024, Paxful co-founder Artur Schaback pleaded responsible to conspiracy to fail to preserve an efficient AML program in relation to the identical scheme.
Although federal pointers urged a a lot greater penalty, Paxful pays $4 million based mostly on its monetary situation. The firm is scheduled to be sentenced in February 2026.
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