Paxful to Cease Operations Following LocalBitcoins in Dwindling P2P Market
Paxful, a Peer-to-Peer Bitcoin Marketplace, Shuts Down Abruptly Amid Regulatory Challenges and Key Staff Departures
Paxful, a renowned peer-to-peer bitcoin marketplace, has announced the abrupt shutdown of its platform, leaving its customers and industry analysts in shock. The announcement was made by CEO Ray Youssef, who cited challenging regulatory conditions for the industry and the recent departure of key staff as reasons for the shutdown.
Details of the shutdown remain scanty as Youssef could not provide more information, but he assured customers that their funds were safe and urged them to withdraw them from the platform. He also recommended self-custody options as the most secure alternative, and suggested that non-U.S. users could explore other options like Noones, a new peer-to-peer platform dedicated to the global south.
The Shrinking Options for Peer-to-Peer Bitcoin Trading
The news of Paxful’s sudden shutdown comes two months after the shuttering of LocalBitcoin, leaving many people with limited options for trading cryptocurrencies among themselves. Paxful and LocalBitcoin were among the few pure-play P2P outfits, while exchanges like Binance offer P2P trading as well.
Steven Zheng, the research director at The Block, noted that “With the shutdown of LocalBitcoins and Paxful this year, peer-to-peer bitcoin trading is now much more difficult.” He explained that users can no longer easily trade Bitcoin in a purely private manner, and privacy is one of the key tenets of cryptocurrency trading.
Paxful’s Struggles Amid Shifting Industry Conditions
Paxful was founded in 2015 and has grown into a massive platform with over 9 million users worldwide. The platform hit $5 billion in total volume traded in 2021, with Nigeria, China, India, Kenya, and the U.S. as its top five countries by volume. The company was listed as one of the most influential companies of 2022 by Time, and its weekly volume peaked around $50 million in May 2022, according to coin.dance data.
However, the platform has faced several challenges over the years, including the removal of Ether from its marketplace in December 2022, and the recent departure of key staff. Youssef had previously urged customers to remove their bitcoin from the platform and move it into self-custody, citing the collapse of FTX as his reason for the recommendation.
Moving Forward
It remains unclear whether Paxful will return or when it might do so. For now, customers are advised to withdraw their funds and explore other options for trading cryptocurrencies. The industry has been experiencing rapid shifts and changes, and Paxful’s abrupt shutdown highlights the challenges faced by companies operating in this space.
Source: TheBlock
