The co-founder and former director of peer-to-peer cryptocurrency marketplace Paxful has pleaded guilty to charges related to the platform’s inability to collect sufficient know-your-customer (KYC) information from its users.
Paxful is a virtual currency platform and money transmission company where users traded crypto assets in exchange for other items.
In a statement, the US Department of Justice (DOJ) said that from July 2015 to June 2019, Artur Schaback marketed Paxful as a platform that did not require KYC and allowed customers to open accounts and trade on the platform without sufficient information to collect and verify their identity.
Court documents also accuse the Estonian national of presenting third parties with false anti-money laundering (AML) policies that were not implemented on Paxful, and of failing to file a single suspicious activity report despite knowing that the users of the platform were engaged in illegal activities. activities.
“As a result of its failure to implement AML and KYC programs, Schaback has made Paxful available as a vehicle for money laundering, sanctions violations, and other criminal activities, including fraud, romance scams, extortion schemes, and prostitution.”
The DOJ says Schaback pleaded guilty Monday to conspiracy to willfully fail to establish, develop, implement and maintain an effective AML program required under the Bank Secrecy Act.
The 36-year-old resigned as Paxful director before entering a guilty plea. He will be sentenced on November 4 and faces up to five years in prison.
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