Paxful CEO Resigns but 3% of Customer Crypto Funds Are Still Frozen
About 75,270 Paxful accounts have been frozen with approximately $5.5 million, and the largest batch is on temporary hold.
Paxful, a former peer-to-peer (P2P) crypto marketplace, through its founder Ray Youssef, has announced that 88 percent of all frozen accounts have been unfrozen. Youssef also implied that he has resigned from his position as the Chief Executive Officer, thereby leaving the exchange under a bankruptcy law firm dubbed Richards, Layton & Finger as the custodian. Meanwhile, about 3 percent of total customer funds are still frozen and in the hands of the custodian.
Youssef has indicated that the frozen accounts are held under siege for a reason, including money laundering among other possible charges from the United States. As a result, Youssef indicated that there is nothing beyond what he has done that he can do.
“I gave up my title as CEO to unfreeze these accounts and am also in danger of being in contempt of court. That is what I did besides a lot of sleepless nights. Nothing more I can do but sleep well tonight. Integrity trumps risk,” Youssef noted.
Notably, about 75,270 Paxful accounts have been frozen with approximately $5.5 million, and the largest batch is on temporary hold. According to the details provided by Youssef, over 58k Paxful accounts have potentially been compromised with a total balance of about $1.25 million. Accounts accused of a severe alert amount to 828 with a total balance of approximately $46k. Approximately 5k accounts with a total balance of about $527k have been frozen for unknown reasons.
Reportedly, about 86 Paxful accounts are accused of violating sanctions with a total of approximately $72k. Eleven frozen Paxful accounts with a total of $29k have a seizure order from United States law enforcement.
Paxful and the Crypto Market
Paxful had most of its operations in African countries where it offered its p2p crypto trading services. However, the company blamed the departure of key staff including in the software engineering department. Additionally, the crypto marketplace blamed increased regulatory scrutiny from the United States financial agencies on its downfall.
“This will probably come as a big shock to many. While I cannot share the full story now, I can say that we unfortunately have had some key staff departures. Also, regulatory challenges for the industry continue to grow, especially in the peer-to-peer market and most heavily in the US,” Paxful previously noted.
Meanwhile, Youssef stated that they have freed a total of $3 million this year through regulatory compliance. He distanced himself with claims of rug pull and possible theft from the officials.
4.4m of frozen funds remain in Paxful, about 3.3% of total customer funds. We freed a total of 3m this year thru tremendous compliance effort. Those who would say that I am somehow destroying my reputation to steal 4m bucks are mad. I don’t have a price 4million or 4 trillion. pic.twitter.com/MU6GdUweZF
— Ray Youssef (@raypaxful) April 16, 2023
The company’s demise comes as cryptocurrency adoption is headed mainstream around the world. As a result, Youssef has noted he is working on other similar projects within the crypto space.
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