The peer-to-peer Bitcoin exchange Paxful has declared its closure and instructed customers to withdraw their funds from the platform.
The company’s co-founder and CEO, Ray Youssef, made the news and gave the reasons behind it, including major personnel departures and regulatory difficulties for the sector.
Crypto exchange @paxful just suspended their marketplace pic.twitter.com/JRFwUuePN3
— Pledditor (@Pledditor) April 4, 2023
After that, on Tuesday, Youssef stated on Twitter that there is an ongoing legal dispute in which a Paxful co-founder is suing Paxful and Youssef after being “kicked out of the company” more than a year ago.
Youssef did not mention the plaintiff by name, but it is probable that he is referring to co-founder Artur Schaback, who in January brought a claim against Youssef in Delaware Chancery Court, as per a court docket made available on CourtConnect.
Youssef said that the co-founder’s legal team’s tactics drove away the majority of Paxful’s top management. He claimed that the co-founder refused to pay some of Paxful’s employees.
The executive further said that by this past Friday, there were no longer any engineers, members of the compliance team, or security staff who were working for the company. He ultimately claimed that he made the decision to close the business at that time because of security reasons.
All users funds remain safe
“This will probably come as a shock to many,” Ray Youssef wrote in a blog post. “All customer funds are accounted for. Please withdraw them and, if you can, self-custody.”
He said this while recommending options like Exodus or Munn Wallet for users to self-custody their digital assets.
The business is also facilitating easy transfer to alternative options for non-U.S. customers, such as Bitnob, which enables Bitcoin access for Africans, and Noones, a new P2P startup devoted to the Global South.
For those who use Paxful:
1. A new platform recommended by Paxful CEO @raypaxful is live; Noones @noonesapp
2. You can log in to Noones with your Paxful credentials & your KYC, trades, etc will be there already.
3. Log in to Paxful then transfer your funds from Paxful to…
— Grey Jabesi (@greybtc) April 4, 2023
The suspension of Paxful comes at a time when regulators are tightening their scrutiny of crypto firms that operate in the United States.
The CEO also explained that US regulatory issues have made it more difficult to continue operations. Peer-to-peer markets like Local Bitcoins abruptly shut down last month as the country’s regulatory bodies continue to put pressure on some of the largest centralized crypto exchanges like Coinbase and Binance.
However, many people are applauding the usual transparency of Ray Youssef, with many users sharing that they have already been able to withdraw their digital assets from the platform successfully.
Youssef has made various actions in the past that were not meant to maximize revenues for his firm. The CEO said in December 2022 that Ethereum would no longer be available on the platform because of “integrity over revenue.” Last week, he also vowed to reimburse any victims of Celsius Earn on Paxful out from his own pocket, instead of waiting for the bankruptcy procedure to conclude.