Crypto platform Pleads Guilty to Sanctions Breaches and faces $7.5M penalty

December 11, 2025, | Washington, D.C.  –

• U.S. crypto platform Paxful admits to processing transactions tied to sanctions evasion and AML failures. DOJ and FinCEN imposed $7.5M in penalties on the firm after uncovering links to Iran, North Korea, and illicit marketplaces. Sentencing set for Feb 2026.

• Sanctions Violations, Enforcement Quotes
  DOJ officials highlighted that Paxful handled transactions from sanctioned jurisdictions such as Iran and North Korea and facilitated funds for fraudsters, extortionists, money launderers, and illegal prostitution facilitators.
  Acting Assistant Attorney General Matthew R. Galeotti stated, “The defendant attracted its criminal clientele by promoting its lack of anti-money laundering controls…”
  FinCEN Director Andrea Gacki condemned the “wilful disregard” of BSA obligations, while IRS Criminal Investigation corroborated that Paxful profited from these illicit trades. [justice.gov], [finance.yahoo.com] [justice.gov], [hoodline.com] [justice.gov], [fincen.gov]
• "Backpage Effect" and Illicit Financial Activity
  Authorities uncovered that approximately $17 million in Bitcoin flowed from Paxful to Backpage and similar sites, yielding around $2.7 million in profit, a pattern internally referred to as the “Backpage Effect”. [financefeeds.com], [finance.yahoo.com]
• Criminal Guilty Plea & DOJ Penalty
  Paxful pled guilty to three criminal counts: conspiracy to violate the Travel Act, to operate an unlicensed money transmitting business, and to contravene the Bank Secrecy Act (BSA). The platform will pay a $4 million criminal penalty, far below the $112 million it could have faced under sentencing guidelines, due to its limited ability to pay. [justice.gov], [financefeeds.com], [finance.yahoo.com]
• FinCEN Civil Consent Order
  The Financial Crimes Enforcement Network (FinCEN) issued a consent order on December 9, assessing a $3.5 million civil penalty for wilful BSA violations. FinCEN found Paxful facilitated over $500 million in suspicious transactions, including dealings with individuals in Iran, North Korea, Venezuela, and via platforms like Backpage.com. [fincen.gov], [fincen.gov]
• Scale of Platform Activity
  Paxful processed over 26.7 million trades worth approximately $3 3 and generated nearly $29.7 million in revenue between 2017 and 2019, while failing to execute adequate AML/KYC controls. [financefeeds.com], [hoodline.com]

Looking Ahead

• Paxful's sentencing is scheduled for February 10, 2026, in the Eastern District of California. Regulators indicated the company received credit for cooperating with authorities, removing problematic leadership, and undertaking remedial measures. [financefeeds.com], [analyticsinsight.net]

Sources

• Dept. of Justice Press Release: “Virtual Asset Trading Platform Pleads Guilty to Violating the Travel Act and Other Federal Criminal Charges,” Dec 10, 2025 [justice.gov]
• https://www.justice.gov/opa/pr/virtual-asset-trading-platform-pleads-guilty-violating-travel-act-and-other-federal-criminal
• FinCEN Consent Order & Release: Notice of $3.5 million civil penalty for BSA violations, Dec 9, 2025 [fincen.gov], [fincen.gov]
• https://www.fincen.gov/news/news-releases/fincen-assesses-35-million-penalty-against-paxful-facilitating-suspicious
• Finance Feeds / Yahoo Finance: Summary of DOJ and FinCEN partnership and penalties [financefeeds.com], [finance.yahoo.com]
• https://financefeeds.com/paxful-pleads-guilty-to-doj-charges-travel-act-bsa-and-illicit-finance-violations/