Paxful, one of the largest Peer-to-peer crypto exchange, Bitcoin marketplace has announced that it will shut down, directing users to retrieve their funds from its platform.
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“This will probably come as a shock to many,” Paxful co-founder and CEO Ray Youssef wrote in a blog post. “All customer funds are accounted for. Please withdraw them and, if you can, self-custody.”
The blog post cited “key staff departures” and “regulatory challenges for the industry,” but Youssef said during a Twitter space on Tuesday that the decision to close the platform was also influenced by a lawsuit brought by a Paxful co-founder who is suing Paxful and Youssef after being “kicked out of the company” more than a year ago.
“My co-founder sued the company and sued me,” Youssef said. “I have a lawsuit over my head right now.”
Though he did not name the plaintiff explicitly, Youssef is likely referring to co-founder Artur Schaback, who filed a lawsuit in Delaware Chancery Court against Youssef in January, according to a court docket hosted on CourtConnect.
Paxful is a nominal defendant in the litigation, so we cannot share much around the case,” a Paxful spokesperson said that, also declining to identify the plaintiff. “But I can confirm that Artur Schaback is a co-founder and current board member of Paxful.”
The announcement of Paxful’s closure comes just days after Youssef promised to make Paxful Earn customers whole. The service had allowed Paxful customers to earn a yield on Bitcoin through a partnership with Celsius, a prominent crypto lender that filed for bankruptcy last July.
The Paxful spokesperson noted that, despite the company’s impending closure, Paxful’s wallet is operational, and “users can get their funds out safely.”