Paxful suspended operations last week, explaining to its users that the peer-to-peer (P2P) platform is unsure whether operations will resume. As one of the leading marketplaces for Africans—particularly Nigerians and Kenyans—crypto enthusiasts on the continent are unhappy with the development.
Ray Youssef, the company’s co-founder, is already trying to garner attention for a new application called Civilization Kit (Civ Kit), set to release its whitepaper in the coming days. The app, built on the Jack Dorsey-backed decentralized social media protocol Nostr, is a decentralized peer-to-peer bitcoin trading application.
Civ Kit’s whitepaper (a well-detailed report that informs readers about the solutions the app seeks to provide) will be released in one or two weeks, Youseff claimed. From now on, he intends to rally the Bitcoin community to help build and fund the project.
Paxul implores customers to divert funds to non-custodial wallets or other platforms, such as the newly created Noones peer-to-peer Bitcoin market, which Yusuf Nessary and Nicholas Gregory co-founded.
Nessary is also the co-founder and director of Built With Bitcoin (BWB), a nonprofit organization funded by Paxful that aims to provide “humanitarian support powered by Bitcoin.”
Paxful’s troubles
Since its inception in 2015, Paxful has grown in its operation, facilitating numerous peer-to-peer crypto trades and gaining the trust of many Africans. Last year, it removed support for ether, citing Ethereum’s transition to proof-of-stake as the reason for the decision.
Youssef thinks of Paxful as crypto’s “Craigslist.” On a peer-to-peer basis, users exchange Bitcoin for cash, gift cards, mobile money, and other forms of currency. Paxful charged a fee for escrow and dispute resolution services.
According to Youseff, Paxful which is incorporated in Delaware shut down due to regulatory pressure and internal issues.
“We spent millions on compliance, but even that still wasn’t enough,” Youssef told CoinDesk in an interview. “And then, to make things worse, in the middle of January, my co-founder decided to sue the company and myself. The litigation got really nasty, and he scared away our best people. My entire chief-level staff resigned. I had no operational staff.”
Artus Schaback, Paxful’s co-founder, allegedly accused Youssef of shutting him out of the operation, withholding key details about Paxful’s business dealings, and processing fraudulent fund transfers.
“It was like some kind of horrible divorce,” Youssef said. “He was fired over a year ago for several things, namely incompetence and bad behavior. He refused to participate in the internal investigation. He was legally fired.”
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According to a release provided to CoinDesk, Noones mirrors Paxful’s functionality. It, too, comprises three parts: a messenger, a marketplace, and a wallet. Users can now use escrow and moderation services, and Lightning Network functionality will be available in a few weeks.
“The company is based out of the European Union and the United Arab Emirates and will be initially focused on building peer-to-peer financial solutions for the Global South,” the release states.
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