Table of Contents
TL:DR,
- The Paxful shutdown affects 14 million users in 140+ countries; withdraw funds before November 1, 2025 to avoid losing access.
- Closure stems from historic misconduct by former executives plus mounting legal and compliance remediation costs that made operations unsustainable.
- The exchange’s collapse was caused by massive legal and compliance costs stemming from years of ignoring KYC/AML rules, which, while fueling its initial growth, ultimately proved unsustainable.
While Africa’s crypto ecosystems gain a plus, not every exchange gets to be part of it. The Paxful shutdown is a stark reminder that compliance often leads to years of legal battles, ultimately draining an exchange in more ways than one.
What was once a leading peer-to-peer Bitcoin marketplace, having more than 14 million users across more than 140 countries, has announced a full shutdown by November 1, 2025. This particular story is about “the lasting impact of historic misconduct” and what you should do to save your finances.
The Final Chapter: How ‘Historic Misconduct’ Brought the Paxful Shutdown
In October 2025, Paxful, a leading P2P crypto exchange, announced an official shutdown of operations after what some consider as mismanagement and the legal drain of numerous court proceedings.
However, such a fall from grace didn’t happen overnight. According to Paxful, the closure was a result of two main forces: the “lasting impact of historic misconduct” by former co-founders Ray Youssef and Artur Schaback before 2023, and the ongoing expense of compliance remediation.
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Regulation became a cornerstone of every platform, and Paxful was no exception. The platform was success in Africa, which accounted for 45% of its total userbase. Unfortunately, the success soon opened doors for long hands. In 2023, the first crack was visible to the world with Schaback filing a lawsuit against Yousseff, alleging his partner of wrongful termination, misappropriation of funds, money laundering and sanction evasions.
The lawsuit dragged on with Schabak openly confessing he allowed users to trade without proper KYC checks, marketed Paful as not requiring KYC and went as far as presenting fake MAL policy documents to third parties.
The historical misunderstanding details eventually led to a two-year legal war, with the company facing the most impact. According to the July 2024 court documents, former CTO Artur Schaback pleaded guilty in the U.S to conspiracy for failing to implement any effecting money laundering safety measures between 2015 and 2019. This ironically ties to the company’s unprecedented growth since its founding.
CTO Artur Schaback(LEFT) and CEO Ray Youssef(Right)
It explains why the company, having no formal investments, grew exponentially throughout the years. Its secret sauce? Avoiding the cumbersome KYC systems, which are necessary, but most users will prefer one without them.
Under new ownership, the company shifted the entire blame to its former executives’ actions as inconsistent with its current values and ethical standards. Trying to save face didn’t work out too well, and in October, the Paxful shutdown was announced. The continuous legal and compliance costs simply outweighed operational costs, forcing many services to shut down.
Youssef, for his part, responded that he anticipated these outcomes. He argued that the Paxful shutdown was inevitable, especially given the increasing constraints on regulations. In his words:
“The business should have closed down when I left the company two years ago.”
He is now CEO of Noones, a P2P marketplace with over 2 million users as of January 2025. The public message about Paxful closing down is a final goodbye to save face, prompting its users to withdraw their funds and ensure safe and transparent return of funds.
Paxful’s African Legacy: Schools, Savings, and a Surge in Adoption
Paxful’s legacy is inseparable from Africa’s crypto surge. Despite its questionable acquisition, the platform became a core platform for Nigeria, Kenya and South Africa, offering easy on-ramps via more than 400 payment methods.
In 2021, Nigeria counted for 1.5 million of it’s 7 million global users. According to the platforms, the regions achieved new processing highs through gift card trading and mobile integration even after the central bank restricted crypto transactions.
Ghana was also among its top-tier highlights, with the market growing nearly 100% in trading volume year over year and over 400% growth in two years. The region recorded almost $800,00 in weekly volumes. What mainly sparked its highs in Kenya is its M-Pesa Integration. Kenya traders could now easily gain access to their trades, achieving 300% growth, posting record-breaking weekly volumes reaching $1.6 million in P2P Bitcoin trading.
South Africa’s trade also experienced an extraordinary growth of 2800% increase in trade in late 2019. Regions like Johannesburg, Pretoria, and Cape Town led the region’s user adoption.
In Africa, Paxful’s unique services fit local realities, small average trade size, escrow protection and payment options typical tug the hearts of many. It generally saved users 16-24% on remittance costs compared to traditional services.
Aside from trades, Paxful also had several project successes. Its most significant contributions were the Built with Bitcoin Founded, launched in 2017 with a clear goal of building 100 schools. So far, the platform has built two schools in Bugesera District, Rwanda, one in Kenya in Mukalala Village in Machakos and another in Nigeria in Sanga Local, Kaduna state. The platform also launched the Africa Fund, providing Bitcoin donations to support healthcare and educational continuity. According to the data, the funds supported 341 families.
Amid Paxful closing down the platform says it remains financially sound and committed to returning user balances safely. If you’re wondering “how to withdraw from Paxful,” Paxful’s notices instruct users to move balances into other accounts before the platform becomes inaccessible.
The New Era: Regulation Takes Center Stage
The Paxful shutdown is a decade-long story, finally in its last chapters. Since 2015, the platform has served 14 million users, built schools, and partnered with local entities like Uhuru Wallet, OVEX and Bitsika. Ultimately, it’s a setback for longtime users, it’s payment rails, crypto literacy programs, and unique local market designs that provided the blueprint for many international exchanges.
However, it missed the mark when it came to regulations. Kenya, Nigeria, Ghana and South Africa have significantly advanced in terms of rules focusing more on consumer protection above all else. Recently, Nigeria and Ghana made it painfully clear that any unlicensed p2p crypto exchanges will face harsh repercussions down the line.
The longer arc of Paxful’s story, its rise, its challenges, and its outsized role in Africa’s crypto adoption, will remain part of how the region, and the world, learned to use crypto when traditional finance couldn’t reach.
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