Paxful CEO steps down, vows to make users whole by creating a Public Trust
Ray Youssef has resigned and pledged to use his Paxful shares to create a Public Trust to make customers whole.
CEO of Paxful, Ray Youssef, announced his resignation and promised to make Paxful users whole again on April 21, according to his medium post.
In the post, Youssef said that he “will put 99.9% of [his] personal shares in Paxful, which accounts for over 45% of the company, into a public trust.”
Court-appointed Srinivas Raju to take the wheel
Youssef expressed concern for the future direction of Paxful due to not trusting his co-founder “to have access to or control over user funds.”
“Transparency is one of the core tenets of bitcoin. In honor of this ideal, I want to be as transparent as I can be around what’s happening behind the scenes at Paxful.”
Stuck in a “deadlock around the direction of the company” with his co-founder, the pair have agreed to Srinivas Raju — of Richards, Layton, and Finger (court-appointed) — becoming the custodian of Paxful through the process.
Raju now holds total authority and control over the company’s operations and management, and will try to stabilize Paxful — while preparing his recommendation for the court on how the company should proceed.
Roughly $4.5M in customer funds still frozen
Despite Youssef managing to unfreeze 88% of frozen user funds, approximately 3.3% of total customer funds are still frozen — amounting to just under $4.5 million.
“While I am resigning as CEO, my priority will continue to be the resolution of frozen user funds and the reliability of the Paxful Wallet.”
Youssef previously offered his co-founder a deal to purchase all of his shares in Paxful for just one satoshi — on the condition the co-founder carry out necessary compliance work to unfreeze the remaining accounts.
The Paxful co-founder refused this offer.
Public Trust to compensate remaining frozen funds
Set to commit 99.9% of his personal shares into a Public Trust, Youssef said that the funds generated by his shares will be “used to make every Paxful user whole.”
“Anything remaining will go directly towards the Built With Bitcoin Foundation to build schools.”
To prioritize user funds, Youssef said he will ensure the Paxful Wallet remains operational for at least two years “to ensure that people have access to their funds.”
“I want Paxful to be an example of how a bitcoin company was faced with suffocating U.S. regulations and a greedy and selfish bad actor, but still overcame.”