Paxful, a global Bitcoin marketplace with strong roots in Africa, particularly Nigeria, is ceasing operations and refunding users’ funds. Ray Youssef, the CEO, cited mass staff departures and increasing regulatory issues as reasons for the company’s closure.
The peer-to-peer Bitcoin platform is popular in Africa, with Nigeria and Kenya ranking high on the volume-by-country list. According to Youssef, the exits were so bad that “there were no engineers, compliance team members, or security personnel left working at the company.” This situation presented a significant security risk, prompting the decision to close the company’s doors.
With this announcement, Paxful joins the list of US-based cryptocurrency companies that have been forced to close due to regulatory pressure. Bittrex, a Seattle-based cryptocurrency exchange, announced its closure last Friday due to regulatory issues. The Securities and Exchange Commission shut down another US-based platform, Beaxy, for operating an unregistered exchange. Even Binance, the crypto behemoth, was sued by the Commodity Futures Trading Commission last week for violating compliance rules.
Youssef believes that US regulators “still don’t get it” and are becoming increasingly wary of crypto firms. Several reports, however, indicate that infighting within the company may have contributed to the company’s problems.
Paxful cofounder Artur Schaback filed a lawsuit against Youssef and the company after being fired over a year ago, according to Youssef. Youssef claimed that Schaback’s “nasty litigation team” forced the departure of senior company executives.
With the departure of Paxful, the spotlight has shifted back to African crypto companies, many of which are registered in the United States. As the crypto winter continues for another year, we can only hope that the fallout from these shutdowns and regulatory actions does not devastate Africa’s crypto ecosystem.
An anonymous Quidax employee was interviewed about the local implications of the struggling US crypto ecosystem. “We don’t do business in the US. Quidax is registered here in Nigeria,” the staff responded.
