In an abrupt turn of events, peer-to-peer Bitcoin marketplace Paxful has closed its doors indefinitely after a number of internal conflicts and regulatory troubles were brought to light.
The company’s CEO Ray Youssef is now recommending that users of the marketplace migrate to other marketplaces like Noones.
The End of Paxful
Per a statement from Youssef on Tuesday, Paxful has suspended its marketplace, and he is “not sure if it will come back.”
“This will probably come as a shock to many,” wrote the CEO. “While I cannot share the full story now, I can say that we have unfortunately had some key staff departures.”
The executive added that regulatory challenges in the United States have been making continued operation more difficult. While the nation’s regulatory agencies continue to pressure some of the top centralized exchanges like Coinbase and Binance, peer-to-peer marketplaces such as Local Bitcoins outright shut down last year.
The former cited the “very cold crypto winter” as the reason for its closure. Though Paxful’s statement did not cite such concerns, data from Coin Dance shows its weekly global trading volume stagnated under $50 million starting in 2020.
In the United States specifically, the current weekly volume has only been roughly $15 million over the last month. By comparison, the daily volume on Coinbase is roughly $1.3 billion.
Youssef has undertaken numerous measures in the past that weren’t intended to reap maximum profits for his company. In December, the CEO announced the delisting of Ethereum from its platform citing “integrity over revenue.” Last week, he also promised to refund all victims of who lost money in Celsius Earn on Paxful out of his own pocket, rather than waiting for the bankruptcy process to play out.
“While we work through these issues, we have taken the most secure option and ask you to explore self-custody and trade elsewhere,” said Youssef in Tuesday’s statement.
In a Twitter space following Paxful’s closure, Youssef explained that Paxful was forced to close down due to a legal battle with co-founder Artur Schaback.
What About Customers?
The CEO explained that Paxful’s first priority will be returning funds to customers. Youssef recommended that customers withdraw to self-custodial wallets, naming both Exodus wallet and Muun wallet.
He also offered an easy migration option for customers to Noones – a P2P company dedicated to serving the global south. Paxful was especially popular outside of the developed world – particularly in Argentina, where over half of last month’s volume was generated.
Argentina’s inflation rate surpassed 100% in February – a problem that Bitcoin is theoretically meant to help fight against.
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