FinCEN says virtual currency trading platform facilitated suspicious activity; imposes $3.5 million penalty

A convertible virtual currency, peer-to-peer trading platform was fined $3.5 million for allegedly facilitating more than $500 million in suspicious activity involving “a host of illicit actors,” Treasury’s financial crimes enforcement arm said.

The fine against Paxful, Inc., and Paxful USA, Inc., was over “willful” violations of the Bank Secrecy Act (BSA), the Financial Crimes Enforcement Network (FinCEN) said in a consent order dated Dec. 9. The agency said Paxful enabled transactions with countries including Iran, North Korea, and Venezuela, along with Backpage.com, a website seized by the Department of Justice in 2018 for facilitating prostitution and sex trafficking.

The agency said Paxful “admits that it willfully violated the BSA, including failing to: (i) register with FinCEN as a money services business (MSB); (ii) develop, implement, and maintain an effective AML program; and (iii) file suspicious activity reports (SARs).”

The order says Paxful’s payment of a $1.75 million civil money penalty to the Department of Justice will be credited against the $3.5 million due under the order; the other $1.75 will be paid to Treasury.

FinCEN Assesses $3.5 Million Penalty Against Paxful for Facilitating Suspicious Activity Involving Illicit Actors

Consent order