As Bitcoin Platform Paxful Closes, Co-Founder Youssef Talks Up Alternatives

Paxful, the peer-to-peer bitcoin marketplace popular in countries like Nigeria and Kenya, has suspended operations. But Paxful co-founder, Ray Youssef, is already trying to rally support for a new platform called Civilization Kit (Civ Kit) – a decentralized peer-to-peer bitcoin trading application, built on the Jack Dorsey-backed decentralized social media protocol, Nostr.

A white paper for Civ Kit will be released in one or two weeks, according to Youssef, adding that he plans to rally the Bitcoin community to help build and fund the project.

For now, Paxful is encouraging users to move funds to non-custodial wallets or other platforms like the newly created Noones peer-to-peer bitcoin marketplace co-founded by Yusuf Nessary and Nicholas Gregory. Youssef says he supports Noones, but doesn’t have a direct role in the company.

Nessary is also the co-founder and director of Built With Bitcoin (BWB), a Paxful-funded nonprofit organization seeking to provide “humanitarian support, powered by Bitcoin.”

Youssef says Paxful, a Delaware corporation, succumbed to regulatory pressure and internal squabbling, precipitating yesterday’s shutdown, and that Civ Kit will be “the next evolution of Bitcoin.”

“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,” he went on, “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.”

Paxful’s co-founder, Artur Schaback, accused Youssef of shutting him out of the operation, withholding key details about Paxful’s business dealings and making fraudulent fund transfers, according to a recent lawsuit filed last week.

“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 partake in the internal investigation. He was legally fired.”

CoinDesk was unable to reach Schaback for comment.

Paxful was founded in 2015 and facilitated peer-to-peer crypto trading. The marketplace removed support for ether last year citing Ethereum’s move to proof-of-stake.

Youssef describes Paxful as crypto’s “Craigslist.” Users exchanged bitcoin for cash, gift cards, mobile money and other forms of currency on a peer-to-peer basis. Paxful provided escrow and dispute resolution services for a fee.

“It’s just three things: It’s a wallet and it’s a listing service like Craigslist,” Youssef explained. A user can say “Hey, I have a $100 Amazon gift card. Give me $80 in bitcoin and we’re good. And then it’s an escrow. It’s an escrow meaning that once I trade with someone, the escrow guarantees the bitcoins are actually there.”

Noones mirrors Paxful’s functionality, based on a release provided to CoinDesk. It too has three components: a messenger, a marketplace and a wallet. Escrow and moderation services are available to users and Lightning functionality will become available in several 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.

Besides being built on Nostr, Civ Kit will differ from Noones and Paxful because it will enable anyone to build a decentralized bitcoin-based marketplace on top of Civ Kit. The goal is to form a network of decentralized non-custodial bitcoin marketplaces.

“It is possibly the most exciting thing since Bitcoin,” Youssef said. “This will allow anyone – community or nation state – to build their own decentralized marketplace. My dream is that there are 1,000 options running all over the world.”

DISCLOSURE