NoOnes founder Ray Youssef is being investigated by the US Department of Justice (DOJ). The probe centers on allegations that Youssef’s peer-to-peer crypto marketplace, Paxful, operated without proper licensing and failed to implement effective anti-money laundering (AML) controls before it shut down in 2025.
Prosecutors also claimed Paxful facilitated transactions linked to unlawful activities, including payments tied to commercial sex advertising platforms. Youssef disputed the allegations, arguing the move represents a further continuation of the war on crypto.
Prosecutors Cite Years Of Compliance Gaps
Federal prosecutors have charged Youssef in the US District Court for the Eastern District of California. The indictment focuses on his role as co-founder and former CEO of Paxful.
According to court documents obtained by BeInCrypto, prosecutors alleged that Paxful lacked adequate Know Your Customer procedures and meaningful internal compliance controls. Authorities further alleged the platform did not timely file Suspicious Activity Reports as required under federal law.
Authorities also claimed Paxful facilitated transactions linked to unlawful online enterprises, including commercial sex advertising platforms.
The indictment cited specific, dated Bitcoin transfers that prosecutors say were sent from Paxful wallets to addresses linked to Backpage, an online platform accused of facilitating illegal commercial sex advertising.
Youssef has strongly rejected the charges in a series of social media posts.
Youssef Publicly Rejects Criminal Allegations
In a video uploaded to his X account, Youssef claimed that he was in Mexico when authorities deported him to Los Angeles, under orders from the DOJ. He was subsequently arrested and sent to a prison in Santa Ana until a judge ordered his release under supervision following his arraignment. Until the case’s resolution, Youssef cannot leave the United States.
Youssef described the charges as “bogus” and claimed that the case largely rests on approximately $240 worth of Bitcoin transactions.
According to the indictment, Paxful embedded a “Pay with Paxful” button directly on Backpage, allowing users to buy Bitcoin through Paxful and use it to pay for ads on the site.
It further stated that undercover federal agents opened Paxful accounts and successfully completed these transactions, which prosecutors cited as evidence that the payment system actively facilitated related activity.
For Youssef, the situation reinforced his belief that the war on crypto never stopped existing. Instead, it just became more selective.
The latest events come at a difficult time for Youssef’s role in different crypto projects.
Paxful To Pay Million-Dollar Fine
Last week, NoOnes announced on social media that Youssef was no longer the company’s CEO. It also clarified that the legal matters he currently faces are “personal and unrelated to” the company’s decision.
Four days before the DOJ indicted Youssef, Paxful pleaded guilty to three federal criminal charges related to Backpage.
According to court documents, Paxful admitted it conspired to promote illegal prostitution through interstate commerce, operated as an unlicensed money transfer business, and failed to put proper anti-AML controls in place.
In July 2024, Paxful co-founder Artur Schaback pleaded guilty to conspiracy to fail to maintain an effective AML program in relation to the same scheme.
Although federal guidelines suggested a much higher penalty, Paxful will pay $4 million based on its financial condition. The company is scheduled to be sentenced in February 2026.
Source: https://beincrypto.com/ray-youssef-indicted-doj-paxful-case/
