Former Paxful CEO warns users not to use platform amid spate of scams
Reports of scams emerge after Paxful's re-opening — raising concerns about the integrity of the platform in its current state.
Ray Youssef, the co-founder of Paxful, has warned to stay off the platform amid complaints of scamming.
As a peer-to-peer (P2P) marketplace, Paxful provides the infrastructure, including moderation, for users to buy and sell cryptocurrency from each other.
Paxful closes, re-opens
The peer-to-peer marketplace closed in April, with Youssef acknowledging the resignation of several key staff members. However, at the time, he remained unwilling to expand on what else was happening behind the scenes.
Weeks later, Youssef said heightening U.S. regulatory pressure was to blame — as he alerted people to the dangers of dealing with U.S.-based financial companies.
“They will confiscate your funds and not even give you a reason because they cannot by law. The system itself is designed to hurt you.”
During this time, he said he was working on unfreezing funds U.S. regulators had seized — his final act as CEO.
On April 21, Youssef announced his resignation from the company — vowing to make whole the users he could not help at the time.
Although the company managed to unfreeze 88% of funds, approximately $4.5 million remains frozen.
Paxful has offices in Estonia, the U.K., the Philippines, Dubai, and St. Petersburg and does significant business outside the U.S. but is headquartered in New York.
Users getting scammed
Paxful re-opened its peer-to-peer marketplace on May 8. Since then, users have reported being scammed on the platform.
Having fallen victim, Mitch reached out to Youssef, saying he had been scammed. Youssef responded by saying he was powerless to help, adding that he had been banned from the platform.
“I am no longer the CEO of Paxful and have no control over anything happening there. They banned me too. Good luck and trust no ones [sic]. #selfcustody.”
Mitch further pleaded for help, explaining that he had lost eight months of savings amounting to $660, yet Paxful has not addressed the problem.
Youssef reiterated that he is not in a position to resolve the issue, also mentioning that he had taken his funds off Paxful and “will not trade there.”
Before Paxful shut its doors, social media reports were surfacing, raising questions about the quality of moderation on the site. For example, one user relayed a similar story to the incident above, commenting that it was absurd moderators sided with an alleged scammer.
Youssef was asked whether the company was subject to a hostile takeover, and he replied, “It was way worse than that.”
Amendment on May 15 at 17:00 BST – the article removed mention of a social media user who claimed to have lost crypto as this case related to another platform.