Crypto-Currency: Nigerians in shock as Paxful shutdown Operation

Peer-to-peer Bitcoin platform, Paxful, with 1.5m users in Nigeria, has announced that it is shutting down its operations.

This was disclosed by the co-founder and Chief Executive Officer, Ray Youssef, in a blog post on Tuesday. He said, “Today, Paxful will be suspending its marketplace. We are not sure if it will come back.

“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. Also, regulatory challenges for the industry continue to grow, especially in the peer-to-peer market and most heavily in the U.S. While we work through these issues, we have taken the most secure option and ask you to explore self-custody and trade elsewhere.”

According to Decrypt, Youssef, during a Twitter Space said that the decision to close the platform was also influenced by a lawsuit brought by a Paxful co-founder who is suing Paxful and Youssef after being “kicked out of the company” over a year ago.

“My co-founder sued the company and sued me. I have a lawsuit over my head right now,” he was quoted as saying on the Twitter Space.

Though he did not name the plaintiff explicitly, Youssef is likely referring to co-founder Artur Schaback, who filed a lawsuit in Delaware Chancery Court against Youssef in January, based on a court docket hosted on Court Connect.

Although cryptocurrency is banned in Nigeria, the 2020 Geography of Cryptocurrency Report by Chainalysis, ranked Nigeria eighth in crypto adoption and usage among 154 countries included in the study.

Nigerian cities, Lagos and Ibadan, have also been listed as cryptocurrency hubs across the globe by crypto accounting services firm, Recap, which put together a list of the top 50 crypto hubs in 2022. Nigerian cities made it to number 14 (Lagos) and 24 (Ibadan) respectively.

Paxful is credited with pioneering the use of peer-to-peer technology in the country, thus helping to expand the crypto industry in Nigeria.

In an interview with Business Africa Insider in 2022, Paxful’s CEO said that Nigeria is the firm’s largest market, with 1.5 million users and over $1.5 billion volume to date (since 2015).

The Central Bank of Nigeria banned cryptocurrencies and transactions related to them in 2021. CBN claimed that cryptocurrencies are being used for illegal activities including money laundering, terrorism financing, purchase of small arms and light weapons, and tax evasion.