Artur Schaback, co-founder and former CTO of Paxful, faces up to five years in prison after admitting to failing to implement essential Anti-Money Laundering (AML) protocols at the cryptocurrency exchange.
The U.S. Justice Department revealed that Schaback’s sentencing is set for November 4, following his guilty plea on July 8.
Schaback’s plea deal includes a $5 million fine, payable in three installments: $1 million immediately, $3 million by the sentencing date, and the final $1 million over the next two years. He will also step down from Paxful’s board.
Prosecutors indicated that Schaback, along with Paxful’s then-CEO, neglected to establish a required AML program within the initial 90 days of the business’s operation, as mandated by the Bank Secrecy Act. They also failed to create a Know Your Customer (KYC) process to verify users’ identities.
This oversight allowed Paxful to be used for money laundering and other illegal activities between July 2015 and June 2019. Schaback and his partner permitted trading on the platform without adequate user verification and falsely advertised Paxful as not requiring KYC.
BingX, a cryptocurrency exchange, has alerted users to a possible security breach involving its hot wallet, leading to the activation of emergency protocols.
In the next five years, government prosecutors and tax agencies are expected to utilize artificial intelligence to analyze blockchain data for crime detection, according to Chainalysis CEO Michael Gronager.
Germany has shut down 47 cryptocurrency exchanges, accusing them of enabling cybercriminals to launder money by ignoring anti-money laundering regulations.
In the wake of the $230 million hack at Indian crypto exchange WazirX, the attackers have moved another $12 million worth of Ethereum.