 policies and faces a 5-year sentence.){kind=link}
Earlier this week, the US Department of Justice (DOJ) announced that Artur Schaback, a co-founder of Bitcoin marketplace Paxful, pleaded guilty to “conspiracy to fail to maintain an effective anti-money laundering (AML) program.”
Schaback, who also served as a former chief technology officer (CTO) at Paxful, was said to have operated an exchange without adequate security measures. The DOJ revealed that the 36-year-old could face a 5-year jail sentence.
Paxful Co-Founder Pleads Guilty to AML Violations
Schaback will be sentenced in early November 2024 and is expected to vacate his role on Paxful’s board. The DOJ claims Schaback operated Paxful without proper know-your-customer (KYC) procedures between July 2015 and June 2019. The US enforcement agency added that Schaback marketed Paxful as a platform that does not need KYC. He also gave false AML policies to third parties. And refused to report suspicious activity despite knowing of the illegal activities on Paxful.
The DOJ said in a statement: “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.”
Paxful is a popular Bitcoin trading marketplace with over 12 million users. In March 2023, Schaback filed a lawsuit against his co-founder friend, and former Paxful CEO, Mohamad (Ray) Youssef. This led to a conflict between the two over the exchange’s leadership, with accusations of money laundering, sanctions evasion, and embezzlement of business cash, among other things.
DOJ to Continue Raids on Crypto Crimes
The DOJ has taken significant legal action against several crypto executives, including former Binance CEO and founder Changpeng Zhao. Zhao currently faces a four-month prison sentence for violations of the Bank Secrecy Act during his time at Binance. Other prominent crypto executives to face legal crisis include former FTX CEO Sam Bankman-Fried and Celsius’s Alex Mashinsky.
The DOJ plans to continue its attack on financial crimes involving digital assets. Deputy Attorney General Lisa O. Monaco, in a clear message to crypto companies, said, “If you serve U.S. customers, you must obey U.S. law.”
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