As Bitcoin platform Paxful shuts down, co-founder Youssef talks up alternatives
Paxful, the peer-to-peer bitcoin marketplace popular in countries such as Nigeria and Kenya, has suspended operations. But Paxful’s co-founder, Ray Youssef, is already trying to gather 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 a week or two, according to Youssef, adding that he plans to rally the Bitcoin community to help build and fund the project.
Currently, Paxful encourages users to move funds to non-custodial wallets or other platforms such as the newly created Noones peer-to-peer bitcoin marketplace co-founded by Yusuf Nessary and Nicholas Gregory. Youssef says he supports Noones but does not have a direct role in the company.
Nessary is also the co-founder and director of Built With Bitcoin (BWB), a Paxful-funded nonprofit that seeks to provide “humanitarian support, powered by Bitcoin.”
Youssef says Paxful, a Delaware company, succumbed to regulatory pressure and internal squabbling, which triggered yesterday’s shutdown, and that Civ Kit will be “the next evolution of Bitcoin.”
“We spent millions on compliance, but even that was still not enough,” Youssef told CoinDesk in an interview. “And then to make matters worse, in mid-January,” he continued, “my co-founder decided to sue the company and myself. The lawsuit got really nasty and he scared away our best people. The entire executive-level staff resigned. I had no operational staff.”
Paxful co-founder Artur Schaback accused Youssef of shutting him out of the operation, withholding key details about Paxful’s business dealings and making fraudulent wire 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 participate in the internal investigation. He was legally fired.”
CoinDesk was unable to reach Schaback for comment.
Founded in 2015, Paxful 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 might say “Hey, I have a $100 Amazon gift card. Give me $80 in bitcoin and we’re good. And then there is a deposition. It’s an escrow, which means that when I trade with someone, the escrow guarantees that the bitcoins are actually there.”
Noones echoes Paxful’s functionality, based on a release provided to CoinDesk. It also has three components: a messenger, a marketplace and a wallet. Escrow and moderation services are available to users, and Lightning functionality will be available in several weeks.
“The company is based outside the EU and the United Arab Emirates and will initially be focused on building peer-to-peer financial solutions for the Global South,” the release said.
In addition to being built on Nostr, Civ Kit will differentiate itself 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’s 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 worldwide.”
