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Paxful co-founder pleads guilty to failed AML program

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Paxful co-founder and former CTO Artur Schabak pleaded guilty to conspiring to knowingly fail to establish, develop, implement and maintain an AML program as required by the Bank Secrecy Act.

In a statement, the Department of Justice (DOJ) Office of Public Affairs said Shabak failed to collect required KYC information from customers who opened accounts to trade on Paxful between July 2015 and June 2019.

DOJ: Shabak Allowed Paxful to Launder Money and Commit Fraud

The former executives are accused of promoting Paxful as a platform that did not require KYC, misrepresenting its AML policies to third parties, and failing to file suspicious activity reports while knowing they were not being enforced.

The Department of Justice failed to implement AML and KYC programs. Said The 36-year-old Estonia resident is alleged to have used Paxful as a “vehicle” to commit a variety of criminal activities, including money laundering, sanctions violations, fraud, romance scams, extortion and prostitution.

“Shabak pleaded guilty to conspiring to knowingly fail to establish, develop, implement and maintain an effective AML program as required by the Bank Secrecy Act.”

Schabak’s sentencing is scheduled for November 4. He faces a maximum sentence of five years in prison. The sentence will be decided by a federal district court judge, taking into account the U.S. Sentencing Guidelines and other statutory factors. Schabak will also step down from his position as a director of Paxful Inc.

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