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Rhodilee Jean Dolor
1 week, 6 days ago

Founder of Peer-to-Peer Crypto Exchange Paxful Pleads Guilty Over Anti-Money Laundering Program Failures: DOJ

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The co-founder and former director of peer-to-peer cryptocurrency marketplace Paxful has pleaded guilty to charges related to the platform’s failure to gather sufficient know-your-customer (KYC) information from its users.

Paxful is a virtual currency platform and money transmitting business where users traded crypto assets in exchange for other items.

In a statement, the U.S. Department of Justice (DOJ) says that from July 2015 to June 2019, Artur Schaback marketed Paxful as a platform that did not require KYC and allowed customers to open accounts and trade on the platform without sufficiently collecting information and verifying their identity.

Court documents also accuse the Estonian national of presenting third parties with fake anti-money laundering (AML) policies that were not implemented on Paxful as well as failing to file a single suspicious activity report despite knowing that the users of the platform were engaged in illicit activities.

“As a result of his failure to implement AML and KYC programs, Schaback made Paxful available as a vehicle for money laundering, sanctions violations, and other criminal activity, including fraud, romance scams, extortion schemes, and prostitution.”

The DOJ says that on Monday, Schaback pleaded guilty to conspiracy to willfully fail to establish, develop, implement and maintain an effective AML program required under the Bank Secrecy Act.

The 36-year-old resigned as Paxful director before entering a guilty plea. He will be sentenced on Nov. 4th and faces a penalty of up to five years behind bars.

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