According to law enforcement, from July 2015 to June 2019, 36-year-old Artur Schaback operated the P2P platform Paxful and was engaged in the business of transferring fiat currencies and digital assets. Schaback allowed clients to open accounts on the platform and trade without undergoing identification. Moreover, Schaback advertised Paxful as a platform that does not require KYC, the US Department of Justice alleges.
The DOJ’s press release stated that Shabak published fake AML policies to third parties that were not actually implemented on Paxful. The company’s co-founder also failed to file suspicious activity reports, knowing that some Paxful users were committing criminal acts. By failing to implement AML and KYC programs, Shabak turned Paxful into a vehicle for money laundering, extortion, fraud, love scams, and prostitution, the DOJ said.
Shabak pleaded guilty to conspiracy to willfully fail to comply with AML rules. Shabak will be sentenced on November 4. He faces a maximum sentence of five years in prison and must resign from the board of directors of Paxful Inc.
In the spring of 2023, Paxful closed due to pressure from regulators and an internal conflict between Shabak and the platform’s other co-founder, Ray Youssef. However, a month later, the exchange resumed its operations.
Source: Bits
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