Paxful, the peer-to-peer Bitcoin marketplace, announced its sudden shutdown and directed users to withdraw their funds from its platform. The CEO and co-founder Ray Youssef cited “key staff departures” and “regulatory challenges for the industry” in a blog post, but also acknowledged during a Twitter space that a lawsuit brought by a co-founder who was “kicked out of the company” more than a year ago was a factor in the decision.

Youssef did not name the co-founder explicitly, but court dockets hosted on CourtConnect show that Artur Schaback, a co-founder and current board member of Paxful, filed a lawsuit against Youssef in Delaware Chancery Court in January. Schaback is reportedly suing Paxful and Youssef, and the lawsuit may have played a role in the closure of the platform.

Youssef also claimed that Paxful’s senior staff were largely driven away from the company because of actions taken by the unnamed co-founder’s legal team. The co-founder also reportedly refused to pay some of Paxful’s employees. Youssef said, “His litigation team was really nasty. They drove away all of our senior-level staff who just couldn’t deal with this guy anymore.”

read also Paxful Launches Paxful Pay Solution to Strengthen Cryptocurrency Adoption

The closure of Paxful comes just days after Youssef promised to refund all affected users of its Paxful Earn product, which allowed users to earn a yield on their Bitcoin through a partnership with Celsius, a prominent crypto lender that filed for bankruptcy last July. Despite the company’s impending closure, Paxful’s wallet is reportedly operational, and “users can get their funds out safely.” 

Paxful was originally founded in 2015 and allowed customers to trade Bitcoin and Ethereum, along with the leading stablecoin Tether. However, the company dropped support for Ethereum last December. According to Coin Dance, trading volume on Paxful totaled around $35 million in the past week, with users based in countries like Argentina, Kenya, and India. Despite the company’s closure, Youssef claimed that Paxful was ultimately successful in fostering Bitcoin adoption in West Africa and other areas of the Global South.

Paxful shut down Paxful shut down

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert. 
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard