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U.S. DOJ hits Paxful for $4 million in case t
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U.S. DOJ hits Paxful for $4 million in case tied to illegal sex work, money laundering
U.S. DOJ hits Paxful for $4 million in case tied to illegal sex work, money laundering
The crypto platform's penalty was sharply reduced due to its ability to pay, according to U.S. authorities.
By Jesse Hamilton|Edited by Stephen Alpher
Feb 11, 2026, 6:52 p.m.
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The former crypto platform Paxful was sentenced in its criminal case. (Jesse Hamilton/CoinDesk)
What to know:
- The U.S. Department of Justice won a $4 million penalty from former crypto platform Paxful in a sentence tied to the dodging of money-laundering laws.
- The amount was reduced from an original amount of $112 million by prosecutors after determining the business couldn't pay that much, the DOJ said.
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.
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The peer-to-peer bitcoin BTC$67,745.59 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
PaxfulU.S. Department of Justicecriminal activityMoney Laundering
More For You
SEC's Paul Atkins grilled on crypto enforcement pull-back, including with Justin Sun, Tron
The U.S. agency's chairman said in a House hearing that he's open to a confidential briefing for lawmakers on the topic.
What to know:
- U.S. Securities and Exchange Commission Chairman Paul Atkins told a senior Democratic lawmaker that he can't talk about the paused enforcement case against Justin Sun and his Tron Foundation, but he agreed he'd consider a confidential briefing for lawmakers.
- While Democrats targeted the SEC's crypto enforcement stance in an oversight hearing of the House Financial Services Committee, Republicans focused on Atkins' intentions to offer crypto regulations.
- Atkins said he's pushing forward on rules that will closely align the agency with the Clarity Act on crypto market structure, even as that bill's outcome in the Senate remains unclear.
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