The U.S. Department of Justice announced that cryptocurrency exchange Paxful Holdings Inc. has been fined $4 million for failing to establish effective anti-money laundering controls. Prosecutors allege that the platform allowed and profited from the flow of illicit funds related to fraud, prostitution, and human trafficking for an extended period. The Department of Justice stated that Paxful knowingly continued to provide services to some of its clients, citing lax anti-money laundering regulations as a selling point. The investigation also revealed that the platform processed cryptocurrency transactions for websites including Backpage, which was allegedly used to post prostitution-related advertisements involving minors. Data shows that between 2015 and 2022, approximately $17 million worth of Bitcoin was transferred to these websites through Paxful wallets, with the platform profiting at least $2.7 million. The Department of Justice stated that Paxful's founder even referred to the resulting business growth as the "Backpage effect."