In a spontaneous Twitter space hosted by Brad Mills, Ray Youssef said that he decided to call him one day out of concern for user funds due to an ongoing lawsuit against him and the company by co-founder Artur Schaback.
“I have a cause on my mind right now,” Youssef said. According to him, Schaback is harboring grudges after being ‘kicked’ out of the company a year ago. “I couldn’t guarantee the platform’s security.
That’s why this thing had to go down.”
He continued:” [Schaback] was pissed off, so he sued the company, and his litigation team was really bad. They kicked out all of our senior level staff. They just couldn’t deal with this guy anymore and then he refused to pay our engineers and he refused to pay for our
compliance.”
Although the court ordered him not to make important moves, Youssef said that he “could no longer do it, ethically” and took on “enormous legal responsibilities” to end everything.
Meanwhile, according to the CEO, Paxful failed to win with US regulators. In the frustration often echoed by other players in the sector, Youssef complained that the company has ‘bent backwards over the past five years to comply with the highest standards’, but the regulators ‘still don’t understand it, and it’s painful to see. ‘ He revealed that a quarter of the company’s staff were compliance people, but “even that wasn’t enough to please Uncle Sam
.”
At the close of the exchange, Youssef urged users to withdraw funds and preferably self-custody, recommending the Exodus and Muun wallets.
He also supported Noones and Bitnob for trading BTC. Noones is an app still under development that will feed a P2P market for the South of the world and will initially allow users to exchange BTC, USDT and USDC. Bitnob is an app based in Nigeria that users from certain African countries can use to buy, sell, and save
in Bitcoin.
Paxful over the years
Paxful burst onto the scene in 2015 and quickly achieved success to become a household name, especially in African countries such as Nigeria, Ghana, South Africa, and Kenya, even making it onto the Times’ prestigious list of 100 most influential companies along the way.
By 2023, it had processed more than $5 billion in transactions and registered more than six million users with a presence in more than 100 countries.
The company has supported 350+ payment methods for users to buy and sell cryptocurrencies, including cash deposits, gift cards, online and mobile money wallets, and bank transfers. Over the years, Paxful has expanded its offering beyond Bitcoin to include other assets such as Ethereum, Litecoin, USDT,
and USDC.
But for all its success, Paxful has lost the fine print on the customer experience. While it had merchant protection mechanisms such as engagement and dispute resolution in place, that didn’t stop a horde of scammers from setting up a tent on the exchange. As someone who has used the platform, my experience has been that the exchange’s business climate could be terribly lax or even
fraudulent.
Such scamming behavior could include:
- More buyers who violate the no trade rule for P2P trading
- Traders regularly cancel a trade without notice to the other party (an explicitly prohibited practice, for example, on Binance)
- Buyers who attempt to buy cryptocurrencies not only below their fixed trading price, but below the market price
- Unwitting traders who steal, new users
In fact, a quick check on online forums like Reddit seems to show a lot of angry users, with the common theme “Paxful is full of scams” and the complaint that the exchange does little or nothing to protect customers.
While there will always be people trying to cheat the system wherever there is money to earn, and Paxful has positive reviews, that doesn’t mean that a portion of its users haven’t found its trading environment super unprofessional.
Looking to the Future: Other P2P Crypto Trading Alternatives
Paxful is the last P2P exchange to bow after the legendary Bitcoin exchange LocalBitcoins closed its doors in February. Both exchanges have felt the regulatory heat, with the Finnish company once saying that compliance demands in Europe had an impact on its operations. Paxful losing the battle is another bitter pill to chew on for an industry that can’t keep regulators happy..
But what other P2P alternatives are available for Paxful users? Here are some of the most reliable:
- Binance P2P: a marketplace that allows users to buy and sell cryptocurrencies using their local currency. It is a platform offered by Binance, the world’s largest cryptocurrency exchange by volume
- Huobi P2P: a Huobi platform based in Seychelles that allows users to buy and sell directly from another party.
- Bisq Network: an open source, privacy-focused Bitcoin trading platform built on Tor
- Hodl Hodl: an open source Bitcoin trading solution that uses a multi-signature escrow system to obtain secure and trustless transactions
P2P will live on
The shutdown of Paxful was an unexpected development. The shutdown, caused in part by regulatory oversight, is a reminder that heavy oversight remains a thorn in the side of cryptocurrencies
.
It’s also a warning for leadership that doesn’t read from the same script. In an already precarious environment, crypto companies that keep the peace will be better
equipped to survive.
But despite a sticky legal landscape, the cryptocurrency industry continues to grow. It’s encouraging that protocols like Bisq and Hodl Hodl, which are decentralized and therefore immune to regulatory repression, exist and can fill the gaps in times like these
.
