Paxful Co Founder Artur Schaback admits AML Failure and faces up to 5 years in Jail
Paxful co-founder Artur Schaback potentially faces up to five years in prison as a maximum penalty as the former chief technology officer (CTO) admitted to failure to maintain an effective anti-money laundering (AML) program.
Paxful Inc. Co-Founder Pleads Guilty to Conspiracy to Fail to Maintain Effective Anti-Money Laundering Program
— Criminal Division (@DOJCrimDiv) July 8, 2024
🔗: https://t.co/B3DCa5DFQY pic.twitter.com/Zbkgi90dEr
According to the US Department of Justice, he pleaded guilty in federal court in California on Monday, where he could receive a maximum sentence of five years in prison. Schaback is also going to step down from the Board of Directors of Paxful.
Court documents state that Artur Schaback, 36, of Tallin, Estonia, operated Paxful Inc. from July 2015 to June 2019. Paxful is an online peer-to-peer virtual currency platform and money-transmitting business where users could exchange virtual currency for a range of other items, such as fiat currency, pre-paid cards, and gift cards.
During this time, Schaback advertised Paxful as a platform without requiring KYC; he gave false presentations of AML policies to outside parties, knowing full well that Paxful did not actually implement or enforce them; he permitted customers to open accounts and trade on the platform without obtaining adequate KYC information; and he neglected to file any reports of suspicious activity, even though he was aware that Paxful users were engaging in illicit and suspicious activities.
Schaback's failure to implement AML and KYC programs resulted in Paxful being available as a vehicle for money laundering, sanctions violations, and other criminal activity, including fraud, romance scams, extortion schemes, and prostitution. Schaback entered a guilty plea to the charge of conspiring to willfully neglect to create, develop, implement, and maintain an effective AML program as mandated by the Bank Secrecy Act.
His sentencing is set for November 4 and will be decided by a federal district court judge after taking other statutory considerations and the United States sentencing guidelines into account, the post added.
Paxful made the announcement that it was closing its doors in April 2023. This decision was made due to concerns about how operations would continue after key employees left. Paxful has complied with a court order designating Srinivas Raju, a director at the legal firm Richards, Layton, and Finger, as the exchange's custodian, as CEO Ray Youssef stated on his blog in April 2022.
Late in May 2023, Paxful announced that Roshan Dharia had been named interim.
Disclaimer: This information should not be considered financial advice by any means. Please do your own research before making any investment decisions. The views in the articles are personal opinions only. Whale Insider is not responsible for any financial losses incurred.