On April 4, Paxful, a well-known peer-to-peer Bitcoin exchange in Nigeria, made the announcement that it was ceasing operations.
Why is Paxful Shutting Down?
Due to regulatory concerns and large workforce attrition, Paxful has declared that the company is shutting down operations. Although the CEO of the firm assured consumers that all of their cash is secure, the market’s future is unknown.
The use of gift cards by Paxful to entice unbanked African consumers created regulatory questions in the US.
In addition to having a high staff turnover rate, the business is also embroiled in a legal battle with its former COO and co-founder.
The decision to shut down was forced by regulatory issues and the departure of several of Paxful’s key personnel, according to the company’s founder and CEO Ray Youssef.
The CEO asked customers to withdraw their money while emphasizing that “we are unclear if the marketplace will bounce back.” He said that “all client cash has been accounted for.”
What Led to Paxful’s Shutdown?
Youssef claims that strategies like using gift cards to gain new members in Africa without bank accounts raised regulatory issues in the US.
Asides from issues of high employee turnover, the company is also embroiled in a legal battle with co-founder and former COO Artur Schaback, who filed a lawsuit against it in January and named Youssef and Jude Chidi Ogene as defendants. Until March, Ogene served as Paxful’s chief legal officer, as stated on his LinkedIn profile.
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What happens to customer funds?
On March 29, Paxful announced that it will begin returning any money that had been placed in Celsius users of its Earn program, following its bankruptcy.
Note that in 2021, the Central Bank of Nigeria (CBN) outlawed cryptocurrency trading through Nigerian banks. As a result, Paxful became the go-to option for Nigerians looking to trade cryptocurrencies. Nigerians used Paxful to transact more than $1.16 billion in Bitcoin between January 2021 and June 2022.
Paxful is the only P2P exchange that has made its data public and well-known, despite the fact that there are other P2P players in Nigeria.
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