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Don't want to go to prison
If you've been in the crypto sphere for a while, you should already know two things: you should never want to invest more money than you can afford to lose, and you will never want to read the words "Please bear with me"; I don't want to go to jail," from the CEO of a major exchange - for example, Paxful. On April 6, Ray Youssef, CEO and co-founder of Paxful, a US-based P2P Bitcoin exchange, announced that he was working on a plan to refund users' funds with his own money in order to comply with the law and avoid...
Don't want to go to prison
If you've been in the crypto sphere for a while, you should already know two things: you should never want to invest more money than you can afford to lose, and you will never want to read the words "Please bear with me"; I don’t want to go to jail,” from the CEO of a major exchange – Paxful, for example.
On April 6, Ray Youssef, CEO and co-founder of Paxful, a US-based P2P Bitcoin exchange, announced that he was working on a plan to refund users' funds with his own money in order to comply with the law and avoid getting into deeper legal trouble after the sudden closure of his exchange.
Youssef explained that he was at risk of going to prison for failing to comply with court orders to return Paxful's frozen funds, which led him to take such drastic measures.
The co-founder of Paxful explained that he takes such a risk because otherwise the funds could “go into oblivion” and users may never be able to recover them. However, he asked the community to be patient in carrying out this task.
Updated on frozen funds: I am now clearly working on a plan with the court where *I* will make users entirely out of my pocket. I'm already in danger of being held in contempt of court. I always put user funds first. Please carry it with me. I don't want to go to jail 😓 but I still want to swing!
– Ray Youssef (@raypaxful) April 6, 2023
Paxful and Youssef were sued by a former partner
Youssef said in an interview that his problems stemmed largely from a legal dispute with Artur Schaback, another Paxful co-founder, who was unhappy with his departure from the company and accused Youssef of excluding him from internal operations and making fraudulent money transfers.
"In mid-January, my co-founder decided to sue the company and me. The litigation got really nasty and it alienated our best people. My entire top-level staff resigned. I had no operational staff."
He added that Youssef's dismissal was "like some kind of terrible divorce" as his former partner was fired more than two years ago for various reasons, including "incompetence and misconduct" for refusing to participate in the company's internal investigations.
Youssef's goal before facing the current problems was to build a network of decentralized, non-custodial Bitcoin marketplaces that would be "the most exciting thing since Bitcoin." However, that dream appears to have been extinguished following the regulatory issues that have hit the company and the lawsuit filed by its former partner.
US regulators and the crypto companies
AsCryptoPotatoAs recently reported, Paxful added its name to a list of cryptocurrency exchanges that have closed or been hit by regulatory pressure, particularly from the US government. The company spent millions of dollars trying to comply, but “it wasn’t enough,” Youssef said.
Although Youssef was forced to close his seven-year-old company, his desire to continue working in the crypto ecosystem is far from over. The entrepreneur is partnering with Twitter co-founder and former CEO Jack Dorsey to launch a decentralized P2P Bitcoin trading platform called Civilization Kit (Civ Kit).
According to Youssef, the platform will launch in less than two weeks. Will Civ Kit be a Paxful clone or will it be a brand new, exciting development for the Bitcoin ecosystem?
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