Another peer-to-peer cryptocurrency exchange has failed due to regulatory compliance costs and a legal dispute between executives.
Paxful, a Bitcoin peer-to-peer marketplace, has shut down indefinitely as a result of internal conflicts and regulatory obstacles. Ray Youssef, the chief executive officer of the organization, now recommends that consumers of the marketplace relocate to other markets, such as Noones.
The Collapse of Paxful
According to a statement released by Youssef on Tuesday, Paxful has suspended its marketplace and “it is unclear if it will return.”
“This will likely come as a surprise to many,” the CEO wrote. “Although I cannot discuss the entire story at this time, I can tell that we have lost several key professionals.”
The executive noted that regulatory hurdles in the United States have made it more difficult to sustain operations. Last year, peer-to-peer marketplaces such as Local Bitcoins completely shut down, even though regulatory bodies continue to place pressure on the industry’s biggest centralized exchanges, such as Coinbase and Binance.
The former claimed the “very cold crypto winter” as its rationale for closing. Coin Dance data indicates that Paxful’s weekly global trade volume will remain below $50 million beginning in 2020, despite Paxful’s lack of mention of such worries in its announcement.
In the last month, the current weekly volume in the United States has been approximately $15 million. In comparison, Coinbase’s daily volume is approximately $1.3 billion.
Youssef has made various actions in the past that were not focused on maximizing profits for his company. Ethereum was delisted in December when the CEO cited “integrity over revenue” as the reason. In addition, he promised to reimburse all victims who lost money in Celsius Earn on Paxful from his own pocket, rather than letting the bankruptcy process take its course.
“Till we work through these challenges, we have chosen the most secure alternative, which is for you to consider self-custody and trade elsewhere,” Youssef said in a statement released on Tuesday.
Youssef indicated on Twitter following Paxful’s shutdown that Paxful was forced to shut down due to a legal dispute with co-founder Artur Schaback.
What About Customers?
The CEO emphasized that repaying consumer funds will be Paxful’s first priority. Youssef suggested that clients withdraw to self-custodial wallets, specifically identifying Exodus wallet and Muun wallet.
He also provided clients with a simple migration option to Noones, a P2P company focused on servicing the global south. Outside of the industrialized world, Paxful was highly popular, particularly in Argentina, where more than half of last month’s volume was generated.
In February, Argentina’s inflation rate topped 100 per cent, which is a problem that Bitcoin is supposedly designed to combat.