Crypto exchange Paxful, has joined the growing number of exchanges winding down due to downturn and regulatory challenges the industry is facing.
Paxful founder and CEO, Ray Youssef announced the decision in a statement shared on the platform.
“Today, Paxful will be suspending its marketplace. We are not sure if it will come back,” the statement reads.
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“This will probably come as a big shock to many. While I cannot share the full story now, I can say that we unfortunately have had some key staff departures. Also, regulatory challenges for the industry continue to grow, especially in the peer-to-peer market and most heavily in the U.S. While we work through these issues, we have taken the most secure option and ask you to explore self-custody and trade elsewhere.”
Paxful is a peer-to-peer (P2P) cryptocurrency marketplace that allows users to buy and sell Bitcoin and other cryptocurrencies using various payment methods such as bank transfers, credit and debit cards, and even gift cards.
The decision to shut it down comes on the heels of market turmoil and regulatory tightening by governments around the world, which have seen other P2P platforms such as LocalBitcoins shut down operation too.
Founded in 2015 by Ray Youssef, the Delaware, US-based company has been offering crypto exchange services to countries around the world, including Nigeria, where it was receiving huge transaction volumes until recently. Government’s prohibition of regulated financial institutions from enabling crypto transactions – though limited the volume of trade from the West African country, made Paxful more popular.
Paxful’s P2P services provided a safe and secure platform for users to trade cryptocurrencies without the need for intermediaries such as banks or financial institutions. For traders in Nigeria, it was a welcomed alternative in the face of the government’s apathy toward cryptocurrency.
The company said in 2022 that it had reached over 10 million users globally with Nigeria accounting for over 2 million users. With its growing popularity in Nigeria, Paxful introduced corporate social responsibility (CSR) as part of services in the country.
In 2021, Paxful opened the PaxNaija Education Center to empower Nigerians through Bitcoin education, hosted several campus tours and workshops to encourage entrepreneurship, and met with hundreds of community members to help increase financial literacy.
Youssef also co-founded the Built With Bitcoin Foundation, a non-profit organization dedicated to creating equal opportunities by providing clean water, access to quality education, sustainable farming and humanitarian support – all powered by Bitcoin. The foundation, which was established as part of Paxful’s mission to support emerging markets, constructed eight schools in Africa, including two in Kaduna State, Nigeria.
As the shock of Paxful’s shutdown spreads, Youssef has assured users that their funds are safe, explaining that the Paxful wallet will be up for customers to retrieve their funds. He advised users to withdraw the funds and hold them personally – using alternate platforms such as Exodus Wallet and Muun Wallet.
As part of its plan to protect customers’ funds, Paxful says it is offering an easy migration to other options for non-U.S. users to platforms like Noones — a new P2P company dedicated to the Global South.
Recommending the platforms it made a list of things its migrating customers can do: “All the things you do on Paxful you can do on Noones”, including:
- Lower trading fees
- One of the cheapest wallets
- An affiliate program even more generous than Paxful’s program
- A more efficient KYC process
- Local dispute moderators
- A much friendlier TOS policy with no accounts being locked
- I personally vouch for Noones, you can trust them
- Bitnob — who makes it easy for Africans to connect with Bitcoin.
Besides its regulatory and personnel concerns, Youssef said Paxful is currently wielding a legal battle with its former Chief Operating Officer and Co-founder, Artur Schaback. Schaback, who was ousted from the company more than a year ago, initiated the lawsuit against Paxful in January.
“My co-founder sued the company and sued me. I have a lawsuit over my head right now,” he said without giving details.