Future of Paxful Bitcoin Exchange in Stream as Co-Founders Fight

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Tensions between Paxful co-founders Ray Youssef and Artur Schaback went public yesterday as the peer-to-peer bitcoin exchange abruptly announced it had suspended operations. As Schaback hopes to get back into business, Youssef has apparently recommended a new provider to Paxful users.

In a post on the Paxfuls website on Tuesday, company CEO Youssefthe urged Paxfuls users to withdraw funds from its platform and explore other locations, citing the departure of key employees and the Regulatory headwinds underway in the United States. He wrote that it was unclear if Paxful would resume operations, suggesting his future was in jeopardy.

During a subsequent Twitter Spaces, Youssef said a lawsuit filed against Paxful and himself by Schaback was an untenable factor weighing on the company, claiming it had prompted key members of the team to resign.

I couldn’t do it anymore, ethically, so I took a huge legal responsibility, and I said […] I’m closing this, said Youssef. He had a court order preventing me from doing anything, but I said, fuck it.

Schaback told Decrypt that Paxfuls’ decision to suspend operations came as a shock. And while he admitted that suspending the platform’s operations could end things altogether, Schaback said he plans to get the market back up and running.

I didn’t expect it to be permanent, he said. My plan is to reopen Paxful with new business management.

Schaback claimed Paxfuls’ announcement yesterday was part of an orchestrated effort to move the company’s operations outside US jurisdiction while blaming him for the company’s problems, which Youssef later denied deciphering. .

Schaback said the root of their disagreement dates back to 2021, when a potential deal between him and Youssef fell through. This potentially involved buying out Schabacks’ stake in Paxful.

He decided, basically, not to buy back my shares or find investors because he found a way to completely take over the company, Schaback said.

Yesterday when Youssef asked users to explore other trading platforms on Paxfuls website, he suggested users to choose another company called Noonesa super app with similar features called Rays Recommendation.

The Noones website indicates that the company is based in Europe and the United Arab Emirates, founded by a small group of passionate Bitcoiners who are dedicated to peer-to-peer in the Global South, including Nicholas Gregory and Yusuf Nessary.

Youssef said he had no direct role at Noones but was supportive of the company, according to reports from CoinDesk. Still, Schaback pointed out that Noones and Paxful share notable similarities, including what appears to be a database of users.

Several accounts on Twitter reached out to Paxful users on Tuesday, saying they can log into Noones with your Paxful credentials and KYC, transactions, etc. will already be there.

Paxful clarified on Twitter that the two companies are not affiliated, directing an account to the Noones website to raise questions or concerns. Please note that Paxful is not affiliated with Noones; it’s a separate platform, the companies’ account said.

Some users of what appeared to be Noones’ official Telegram channel said they were able to log into the platform using their Paxful credentials without any problems, while others asked for help.

The feature is part of several sponsorship deals between Paxful and other marketplaces, as the company seeks any passive income it can get to stay afloat while users withdraw funds, Youssef told Decrypt.

I want the Paxful wallet to stay open for at least two years, he said. This means we need to get passive income into the business to pay engineers and staff.

The two co-founders expressed differing opinions not only on the potential future of Paxfuls, but also on the nature of Schabacks’ lawsuit filed in Delaware Chancery Court in January.

Schabacks’ lawsuit accuses Youssef of several egregious, unauthorized and self-serving actions, such as looting company coffers and a covert scheme to lock Schaback out of Paxful, according to a court document. Youssef denied these allegations.

Instead, Youssef claimed yesterday that the lawsuit was an attempt by Schaback to extract as much money as possible from the business. My co-founder thinks he’s going to get a nine-figure release, and that’s why he fought so hard to do it, Youssef posted on Twitter.

A spokesperson for Paxful declined to comment to Decrypt on issues related to the lawsuit, citing the company’s role as a nominal defendant.

The lawsuit notes that Youssef and Schaback are the company’s only two board members. And as their conflict unfolds, the impact of their disagreement extends far beyond Delaware or the United States.

According to Coin Dance, Paxfuls trading volume totaled around $37 over the past week, with a large share of users based in countries including Argentina, Kenya, and India.

Yesterday Youssef said Paxful has been a great experience, partly because the company has been able to bring Bitcoin to parts of the Global South, starting with Nigeria and expanding to the rest of Africa over time. He said, It made the place fertile.

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