Paxful co-founders’ litigation cites misappropriation of funds, money laundering, U.S. sanctions evasion
A bitter dispute between Paxful's co-founders Artur Schaback and Mohamad (Ray) Youssef in Delaware's courts may have been the real reason behind the Bitcoin marketplace's sudden closure on April 4.
Schaback and Youssef, who started Paxful in 2015 with a shared passion for Bitcoin (BTC), are now litigating the company's control with several accusations against each other, according to court documents. Misappropriation of company funds, money laundering and evasion of United States sanctions against Russia are among the allegations.
Schaback was chief operating officer (COO) at Paxful until February 2022, when he was allegedly blocked from participating in the company's operations over disagreements with Youssef — Paxful's chief executive officer (CEO) — about the marketplace's future and operations, including conflicts about "the legitimacy of ever-increasing expenditures to undisclosed entities."
According to Schaback's claims in the lawsuit, a large quantity of Paxful’s Bitcoin has been transferred to a Turkish entity called “EMiR,” which he claims is not a legitimate software company. "It does not have a website publicizing software or web development services and its physical address [...] Appears to belong to a clothing company."
A subcontractor allegedly receiving payments from EMiR is Dekslektika, a St. Petersburg, Russia-based company owned by former Paxful directors. As per the court filings, those entities were accused of being behind "massive non-ordinary-course transactions" that began after Schaback was frozen out of the company's operations. "There is no legitimate business purpose for these transfers," says the lawsuit.
In comments to Cointelegraph, Youssef classified the claims as "ridiculous." According to
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