Is Paxful in a bad way? The peer-to-peer (P2P) exchange platform has apparently stopped publishing its proofs of reserves. And former CEO Ray Youssef has called on users to withdraw their funds. What do we know so far?
Ex-CEO of Paxful urges users to withdraw funds
Ray Youssef has expressed his fears in a Twitter post that echoes an alert issued by an anonymous Reddit user. The user claims that Paxful has stopped offering its proofs of reserves on its site, so users are at risk:
Paxful has taken down its proof of reserves. I ask everyone to cease trading until we get to the bottom of this! https://t.co/qKtpA8DEic pic.twitter.com/p0JDXRCZEp
– Ray Youssef (@raycivkit) July 7, 2023
The anonymous user explains in his message that Paxful’s ex-employees reportedly explained that they had not been paid. He also reports other rumours:
“Their transfers aren’t working right, their lightning wallet was recently made inaccessible, and I’ve heard rumours that they’re using customer funds to pay their charges as they’re probably going out of business. “
Citing an “FTX scenario”, the message concludes with a call to withdraw funds from the platform. For its part, Paxful has not communicated on this subject.
The unclear interests of Ray Youssef
Since leaving Paxful in 2022, Ray Youssef has constantly encouraged users to leave the platform, in order to promote his own rival platform CivKit. He is also currently engaged in a legal battle with the platform’s co-founder, Artur Schaback. Schaback accuses the former CEO of transferring funds from Paxful to a dummy company and facilitating money laundering.
Ray Youssef’s attacks on his former company are therefore self-serving, to say the least, and should be taken with a grain of salt. That said, there have been various reports of a tense situation at Paxful since the end of 2022. Back in April, our colleagues at CoinDesk published a lengthy report on the clearly risky management of the exchange. The internecine war between Ray Youssef and Paxful co-founder Artur has continued ever since.
While Paxful’s situation is unclear, this is a good opportunity to point out that it is safer to keep your funds in self-hosted portfolios. Unlike online platforms, these portfolios can only be accessed by their holders.
