Peer-to-peer Bitcoin marketplace Paxul has suspended operations on its platform, urging users to withdraw their funds and trade elsewhere.
“This will probably come as a big shock to many. While I cannot share the full story now, I can say that we unfortunately have had some key staff departures,” said Paxful CEO Ray Youssef, in a message posted to the company’s website.
Youssef encouraged customers to withdraw their funds through the Paxful Wallet, recommending self-custody and the use of alternative payment applications like Noones.
A number of users reported being unable to withdraw their funds from the platform, likely caused by the heightened volume of requests on Tuesday.
— Pledditor (@Pledditor) April 4, 2023
“Paxful database is a bit overloaded now as everyone is withdrawing funds. It is making transfers slow. I promise funds r safe and they will clear soon,” tweeted Youssef.
In a Twitter Spaces discussion a few hours later, Youssef shared that the reason behind the decision was because of a lawsuit filed by Paxful co-founder Artur Schaback, who was “kicked out of the company” more than a year ago.
Schaback is now suing Youssef and Paxful, alleging that Youssef authorized fraudulent transfers from the company between July and February.
Youssef claims that Schaback’s litigation team drove away all of Paxful’s senior level staff, and Schaback refused to pay the company’s engineers and compliance team. As of Friday, it got to a point where Paxful had no engineers, compliance staff or security team.
“How can I run a company, and say…I’m keeping people’s funds secure, when I don’t have any of these resources,” said Youssef.
Last week, Youssef vowed to refund all Celsius Earn bankruptcy victims, who invested through Paxful. The Paxful CEO said the firm had dug into its own pockets to make users whole amid the actions of lawyers handling Celsius’ bankruptcy proceedings.