Crypto exchange Paxful has made the headlines multiple times this year both for positive and not-too-positive reasons. Earlier in the year, there was a rumoured shutdown announcement, followed by reports of behind-the-scenes rifts between co-founders and a subsequent relaunch of operations.
New findings have revealed that following the restart, the African peer-to-peer marketplace hasn’t completely overcome its challenges. A former executive revealed to Technext that the company is facing a number of challenges behind the scenes, hence its inability to deliver services efficiently to customers.
This is in line with a plethora of accusations across its social media pages by customers with complaints of inability to withdraw, unresolved disputes and allegations of fraud.
The source told Technext that with recent happenings in the company, Paxful might be finally heading towards a closure.
The problems at Paxful
Of late, Paxful has received enormous backlash online as customers have complained about Paxful’s inefficiency.
In one of the exchanges on the beleaguered company’s Twitter comment section, users complained about the rise in fraud rate on the platform. They also bemoaned the slow transaction rate, indiscriminate ban of accounts, dispute resolution and inability to withdraw funds.
According to a user who spoke with Technext, he started a withdrawal process of almost $2,000 USDT last Saturday and the receiver has not received it despite the fact that the sender has been debited. Also, the transaction has not been assigned a transaction ID.
What this means is that the payment transaction which on a normal day wouldn’t take more than a couple of minutes is still ‘pending’, one week after. When the customer reached out to the support team.
This was the response he received:
“We can see from our end that you have a send-out transaction initiated, which is currently pending for broadcasting to the Network. Your transaction is currently queued and should be broadcasted to the Network soon.
We don’t have a specific timeframe for this, but we went ahead and escalated this to the wallet team for a follow-up. You’ll receive a notification and will see this in your sent transaction history once processed.”
Further checks show that this isn’t this is a recently recurrent issue with the exchange. There are quite a handful of similar complaints on the platform. Plus, this is not unusual with crypto exchanges in the past year.
Paxful’s State of the Union
According to our source, the crypto exchange is currently running at a loss. The company is losing funds and it is now digging into its users’ funds to pay legal bills. The source also disclosed that anytime from now, the Bitcoin p2p marketplace might head towards the rock.
Recall that there has been tension between Paxful cofounders Ray Youssef and Artur Schaback all year. The rift got to a peak in April when Ray announced the shutdown of the exchange.
Following that, Schaback said in an interview that Youssef unilaterally shut down Paxful in April and tried to kick him out of the company. Later on, Youssef announced his resignation from his position at the company.
Paxful resumed operations in May.
Now under the leadership of new CEO, Roshan Dharia. Our source claimed that the company is operating with just one compliance officer, in contrast to the over 80 officers it previously had. This could compromise its safety and compliance standards. Technext also learnt that there is a shortage of capacity in the engineering team as old engineers are yet to be paid. This, we learnt, has contributed to the recent withdrawal debacle.
Paxful typically has about 200,000 daily transactions from around 2020. The number has declined to below 30k daily. This explains why the trade statistics- which were previously made available to all on the website– have been brought down. The source claimed the current numbers are quite embarrassing.
The source also claimed that a New York court has recently issued a default judgment against Paxful and that the company is owing $4.7 million, and an additional $3 million to contractors.
Read also: Inside Bright Enabulele’s mission to give Africans a voice in the crypto space with Oduwacoin
Lastly, our source is confident that Paxful isn’t generating enough revenue from its trades owing to a decline in trading volumes. And, the trend will likely be worsened by the recent rise in customer complaints across social media.
Response from Paxful
Technext reached out to Paxful for questions and clarifications on these concerns. In response to the issues raised, CEO Roshan Dharia said:
“Since our relaunch in May, Paxful has appointed a roster of seasoned executives across our legal, compliance, and engineering departments. The company is well-capitalized and continues to grow rapidly with millions of global users. Paxful has a very bright future ahead and thus we do not intend to comment further on these allegations.”
– Paxful CEO, Roshan Dharia
Note: Other than the announcement of Roshan Dharia as interim CEO in May, Paxful hasn’t publicly announced the appointment of any other executive since it restarted operations. We were also unable to independently verify the claims made by the source.
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