More than a week after suspending operations, the chief executive officer of the peer-to-peer cryptocurrency exchange Paxful announced the unfreezing of 88% of previously frozen user accounts.
In a 16 April Twitter thread, Paxful CEO Ray Youssef stated that approximately $4.4 million in blocked funds remained on the platform after 88% of existing accounts had been unfrozen. According to Youssef, the unfreezing of accounts was accomplished “without any engineers or compliance personnel,” and all remaining blocked funds are “in the hands” of U.S. financial regulators.
Although approximately 3% of total user funds were still suspended, Youssef stated that he had made the unfreezing his “final act” as Paxful’s CEO:
“I gave up my position as CEO to unfreeze these accounts, and I am also in danger of being found in contempt of court.” Youssef stated. “I did this in addition to many sleepless nights. I have no choice but to sleep well tonight. Integrity outweighs the danger.”
The “contempt of court” allegation was almost certainly related to ongoing litigation between Youssef and Paxful co-founder Artur Schaback, who helped establish the platform in 2015. Schaback asserted in court that the corporation was involved in embezzlement, money trafficking, and defiance of U.S. sanctions. At the time, Youssef stated that the allegations were “ridiculous.”
The announcement followed the April 4 suspension of services for Paxful subscribers. Youssef stated at the time that there had been “key staff departures,” citing “regulatory challenges” faced by the platform. In prior months, the CEO had already authorized refunds for Earn users affected by the collapse of Celsius.