DOJ Sentences Paxful to $4M Criminal Penalty for AML and Travel Act Violations, February 11, 2026

On February 11, 2026, Paxful Holdings Inc., a now-defunct peer-to-peer virtual currency trading platform, was sentenced in the U.S. District Court for the Eastern District of California to a criminal monetary penalty of $4 million — the maximum the company could pay, per DOJ's independent financial analysis — following its December 10, 2025 guilty plea to a three-count criminal information. Prosecution was led by the DOJ Criminal Division's Money Laundering, Narcotics and Forfeiture Section (MNF) Bank Integrity Unit and the U.S. Attorney for the Eastern District of California, in coordination with FinCEN.

Paxful pleaded guilty to: (1) conspiracy to violate the Travel Act (18 U.S.C. 1952) by facilitating illegal prostitution through interstate commerce; (2) conspiracy to operate an unlicensed money transmitting business (MTB) in violation of 18 U.S.C. 1960 by knowingly transmitting funds derived from criminal offenses including fraud and illegal prostitution; and (3) conspiracy to violate the Bank Secrecy Act's (BSA) anti-money laundering (AML) program requirement under 31 U.S.C. 5318(h). The applicable guideline fine range was $112.5 million, reduced by 25% to reflect cooperation credit, but was capped at $4 million based on Paxful's demonstrated inability to pay.

Court documents establish that between July 2015 and June 2019, Paxful marketed its platform as not requiring know-your-customer (KYC) information, presented fake AML policies to third parties, and knowingly processed approximately $3 billion in trades — including at least $17 million worth of bitcoin transferred to Backpage and a copycat site involved in illegal prostitution — while collecting over $29.7 million in total revenue. Virtual asset exchanges, custody providers, and peer-to-peer platforms that fail to implement effective AML programs and file suspicious activity reports face equivalent criminal exposure under the same BSA and 18 U.S.C. 1960 theories. This resolution was coordinated with FinCEN and investigated jointly by ICE-HSI and IRS-CI.

Paxful's co-founder and former CTO, Artur Schaback, separately pleaded guilty on July 8, 2024 to conspiring to fail to maintain an effective AML program. The sentencing of the entity completes the coordinated resolution. Press Release No. 25-1158 identifies Bank Integrity Unit Deputy Chief Kevin Mosley as the lead DOJ attorney.

Source: "Virtual Asset Trading Platform Pleads Guilty to Violating the Travel Act and Other Federal Criminal Charges," DOJ Office of Public Affairs Press Release 25-1158 (Dec. 10, 2025), https://www.justice.gov/opa/pr/virtual-asset-trading-platform-pleads-guilty-violating-travel-act-and-other-federal-criminal; sentence confirmed via DOJ Criminal Division, Money Laundering, Narcotics and Forfeiture Section, https://www.justice.gov/criminal/criminal-mnf (listing Feb. 11, 2026 sentencing entry). Confirmed: March 3, 2026.

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