P2P

Paxful CEO announces 88% of accounts unfrozen, $4.4M in funds remaining

“I gave up my title as CEO to unfreeze these accounts and am also in danger of being in contempt of court,” said Ray Youssef.

The CEO of peer-to-peer crypto marketplace Paxful has announced the unfreezing of 88% of previously frozen user accounts more than a week after suspending operations.

In an April 16 Twitter thread, Paxful CEO Ray Youssef said roughly $4.4 million in frozen funds remained on the platform after staff had unfrozen 88% of existing accounts. According to Youssef, the unfreezing of accounts had been accomplished “with no engineers or compliance folks,” claiming all remaining frozen funds were “in the hands of” United States financial regulators.

Youssef said though roughly 3% of total user funds were still frozen, he had made the unfreezing his “final act” as Paxful’s CEO:

“I gave up my title as CEO to unfreeze these accounts and am also in danger of being in contempt of court,” wrote Youssef. “That is what I did besides alot of sleepless nights. Nothing more I can do but sleep well tonight. Integrity trumps risk.”

Related: Paxful shutdown hits Nigeria harder than the rest of the world — Here’s why

The “contempt of court” claim was likely related to ongoing litigation between Youssef and Paxful co-founder Artur Schaback, who helped launch the platform in 2015. Schaback claimed in court the company had been involved in the misappropriation of funds, money laundering and evasion of U.S. sanctions. Youssef told Cointelegraph at the time the allegations were “ridiculous.”

The announcement followed the suspension of operations for Paxful users on April 4. At the time, Youssef said there had been some “key staff departures,” citing “regulatory challenges” the platform was facing. The CEO had already authorized refunds for Earn program users affected by the collapse of Celsius months prior.

Magazine: Journeys in Blockchain: Ray Youssef of Paxful

Peer-to-peer crypto exchanges struggle to navigate shifting legal landscape

Two major P2P platforms announced their closure in the first quarter of 2023. Many blame it on growing regulatory scrutiny, but experts call for better alternatives.

A peer-to-peer (P2P) cryptocurrency exchange is an online marketplace that connects buyers and sellers of cryptocurrencies like Bitcoin (BTC). The platform enables them to conduct direct business with one another without the need for intermediaries. 

When purchasing cryptocurrency on a P2P exchange, a buyer transfers the agreed-upon amount from their account to the seller. The payment is not made between a consumer and a money services company but between two distinct customers.

P2P exchanges were once the lifeline of the crypto ecosystem, owing to the ease of exchange and privacy features that these platforms offered. However, in 2023, some of these key features have driven them to fall under increased scrutiny from regulators.

On Feb. 9, 2023, Finland-based P2P exchange platform LocalBitcoins announced it was closing after 10 years in service. The platform cited tough market conditions owing to the ongoing crypto winter, along with increasing regulatory pressure and declining market share.

The abrupt closure of one of the oldest P2P Bitcoin trading platforms came within weeks of the United States Financial Crimes Enforcement Network (FinCEN) naming the platform as one of the largest Bitcoin counterparties to the Russian-affiliated exchange Bitzlato.

Bitzlato was the target of a significant enforcement action by U.S. officials who accused the platform of violating of Anti-Money Laundering rules and aiding in the evasion of Russian sanctions.

Another prominent P2P Bitcoin exchange platform Paxful, founded in 2015, suspended operations on April 4. The platform cited the ongoing regulatory environment and staff departures as the reason behind its closure. In a Twitter space, CEO Ray Youssef dwelled more on their decision and said even though American regulators have done a lot of catching up in the past five years, they “still don’t get it. They grow more suspicious every day.”

The ongoing court battle between Artur Schaback and Youssef over the control of the firm was also seen as a prominent reason behind its downfall. According to court filings, the two co-founders are currently at loggerheads over who will manage the business and have made a number of charges against one another. The accusations include, among other things, the theft of corporate finances, money laundering and circumvention of U.S. sanctions on Russia.

In an interview with Cointelegraph, both Schaback and Youssef continued their blame game and pointed fingers at the other person. Youssef claimed his co-founder’s legal tactics “bordered on terrorism” and cost Paxful many employees and directors. On the other hand, Schaback said Youssef took unilateral action to shut down Paxful on April 4, and he had no say in the day-to-day operations of the company for almost 18 months.

Recent: Crypto in Europe: Economist breaks down MiCA and future of stablecoins

Richard Mico, chief legal officer of global on- and off-ramp crypto platform Banxa, told Cointelegraph that the breakdown of relationships between the co-founders resulting in litigation could be one of many reasons behind the downfall of Paxful. He added that the ever-evolving regulatory scrutiny in the U.S. had made it difficult for the decentralized crypto platforms and P2P exchanges to thrive:

“Paxful has faced regulatory scrutiny in the past over claims of money laundering and fraud on its platform. In May of 2021, the New York State Department of Financial Services (NYDFS) ordered Paxful to bolster its KYC/AML processes. It is very possible that Paxful is fearful of future ongoing investigations and remediations,” Micro told Cointelegraph.

He said that, aside from concerns over shifting regulatory requirements, market conditions are driving significant consolidation in space. However, he is hopeful that “more transparent regulation in the U.S. will enable both P2P and other exchanges to flourish in a manner that strikes the appropriate balance between consumer protection and innovation.”

P2P shutdowns impact emerging economies the most

P2P platforms have been instrumental in flourishing crypto adoption especially in developing nations and offering banking services to the unbanked. Paxful was a pioneer of crypto adoption in Nigeria, and its shutdown hit many users in the country hard.

Freelancers often used the platform to convert their wages to and from Bitcoin and make payments to each other, while traders made use of its escrow service to conduct business. As such, the closure has left many of these users in Nigeria wondering about the future of the domestic crypto marketplace.

The Indian government imposed a banking ban on crypto exchanges in 2019 cutting all banking facilities to such exchanges. However, WazirX, one of the early crypto exchanges in India, introduced its P2P platform to ensure people were still able to trade their assets. Indian crypto traders turned to P2P platforms again in 2021 after the government imposed a hefty 30% tax on crypto transactions.

Former WazirX CEO Nischal Shetty seemed more optimistic about the future of P2P platforms, particularly in the developing world. He told Cointelegraph that P2P platforms with proper Know Your Customer protocols “help onboard users, especially in developing countries without banking access, and will continue to exist.”

Nick Saponaro, CEO of decentralized payment platform provider Divi Labs, told Cointelegraph that the closures will be painful for unbanked and underbanked traders, hindering their ability to transact locally and globally.

“Countries like Malawi, where citizens are well-capitalized but have restrictive banking practices that only allow customers to withdraw a few USD daily — P2P exchanges are necessary for those individuals to interact with the global financial infrastructure,” he explained.

Ben Jorgensen, co-founder and CEO of Web3 interoperability platform Constellation Network, told Cointelegraph that the closure of P2P platforms is, unfortunately, a massive blow to developing nations, but most likely, these developing nations will see more and more native P2P exchanges crop up.

The rise of better alternatives to P2P

The declining popularity of P2P platforms and the recent closure of some of the oldest P2P platforms are also attributed to the new availability of better alternatives, as there are now more practical on-ramps that enable users to buy cryptocurrency using their bank accounts and credit cards.

The costs of doing business are also important. For example, exchanges like Coinbase spend millions of dollars just to comply with local regulations. The unbanked communities throughout the world stand to gain the most from P2P exchanges, but given the growing regulatory compliance requirements, it is unlikely that they will produce the volumes required to support them on a large scale.

Saponaro told Cointelegraph that the only way new and existing P2P exchanges will survive is as ancillary services offered by licensed operators:

“For example, Binance has a P2P platform; however, the business model is not profitable enough to be the sole revenue stream in a fully regulated environment.”

Marc Taverner, a founding member of Swiss-regulated crypto and fiat on-ramp platform Xerof, told Cointelegraph that users often switch from P2P platforms to other trusted solutions because they need to minimize counterparty risk. Users are naturally migrating to providers that can address these risks:

“We are seeing increasing demand for trusted, transparent and compliant solutions, and it will be operators with licenses from established and respected jurisdictions who will onboard most of these users. P2P markets will still exist. The long-term question just remains how they will cope with heightened regulatory requirements,” he said.

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Jorgensen said that P2P platforms will continue to evolve just like decentralized exchanges and explained, “Although DEXs [decentralized exchanges] are technically peer-to-peer exchanges, they are catered more to a trustless state with much better fees. In terms of regulation now and in the foreseeable future, cash-to-crypto and crypto-to-cash will likely end up where most if not all regulation will be enacted. Think about it. It makes sense that when entering and exiting crypto, like when you are entering and exiting stocks in trade, these cash-in and cash-out points are documented […] Ultimately governments want to tax these transactions, and this approach is the least complicated way to do so.”

The shutdown of major P2P platforms in 2023 has become a sign of evolving regulations, especially in the United States. However, experts believe that P2P platforms will still play a key role in developing nations, and these nations will move toward launching their native platforms to overcome the closure of popular global platforms.

Paxful shutdown hits Nigeria harder than the rest of the world — Here’s why

Paxful’s shutdown has left its global community heartbroken, but it has significantly impacted the Nigerian community, where it pioneered P2P crypto use.

The shutdown of the peer-to-peer (P2P) cryptocurrency marketplace Paxful has left its worldwide community searching for alternatives, but it appears to have significantly affected the Nigerian crypto community. 

On April 4th, Paxful declared that it would halt its operations. The reason for this decision, according to the founder and CEO Ray Youssef’s blog, was due to “key staff departures” and the regulatory environment.

According to “The 2020 Geography of Cryptocurrency Report” by Chainalysis, Nigeria ranked eighth in crypto adoption and usage among 154 countries included in the study. Acceptance and usage of crypto in Nigeria were not as high until Paxful pioneered the use of peer-to-peer technology in the country, helping expand the crypto industry.

A Nigerian crypto user, Emmanuel Susegh, told Cointelegraph that the shutdown of Paxful feels like “the death of a loved one,” as the exchange helped him make his first $100,000. Susegh went on to say that Paxful was the go-to platform he used to trade gift cards from Amazon and Apple for Bitcoin as far back as 2015.

Another member of the Paxful Nigerian community, data analyst Obinna Uzoije, mentioned that in the early days of his career, he used Paxful to exchange the dollars he received from his employers as pay for Nigerian naira. At some point, freelancers in Nigeria who work for international companies were paid through Skrill, an online payment platform. Certain users on Paxful accepted the funds, so the freelancers could easily exchange it for Bitcoin or cash. Uzoije explained that this shutdown leaves a lot of other crypto enthusiasts in Nigeria wondering what the future holds for crypto marketplaces.

Related: Paxful to return lost Celsius funds to Earn users

Over-the-counter (OTC) vendor Akeem Abdullahi expressed that a generation of OTC vendors was created by Paxful’s escrow service. The vendors could buy gift cards from individuals who wanted to sell and were not literate enough to use the platform.

Some community members took to Twitter to express their worry about users getting their funds back. However, Youssef has assured users in a tweet that the Paxful team is working on clearing users’ send-outs.

Magazine: Journeys in Blockchain: Ray Youssef of Paxful

Nigerian crypto investors question central bank’s decision to flag p2p users

Crypto P2P users in Nigeria worry over using various platforms to launder funds as the country’s central bank cracks down on bank accounts that receive a share of Flutterwave’s rumored stolen funds.

Nigerian crypto investors using peer-to-peer (P2P) services have expressed concerns about the Central Bank of Nigeria (CBN) flagging their bank accounts. CBN’s decision to flag accounts is believed to be in relation to the near $6.3 million (2.9 billion nairas) Flutterwave hack, as the bank accounts have yet-to-be-proven affiliations with the hack.

According to local news sources, on February 19, 2023, Albert Onimole, legal counsel for Flutterwave, a Nigerian fintech company, allegedly reported a case to the Deputy Commissioner of Police, in Yaba, Lagos, of almost $6.5 million (3 billion nairas) that had been illegally transferred from the accounts of his client.

On February 27th, a motion ex-parte was filed and granted in support of Flutterwave’s claims. According to the motion, 107 accounts, including their fifth beneficiaries, will be put on lien/Post-No-Debit (PND). So far, some of the locals have confirmed that their accounts have been frozen in connection to the hack.

The situation has gone on to discourage P2P users from interacting with the various over-the-counter (OTC) — markets that allow trading of securities between two counterparties executed outside of formal exchanges and without the supervision of an exchange regulator, as the hacked sum flowed into the Nigeria crypto market on different OTCs and users now have problems with financial intermediaries when they want to use P2P services for crypto transfe.

Investors across the world use P2P as a medium of direct exchange of crypto between parties without the involvement of a central authority. They may choose to swap cryptocurrencies for cryptocurrencies or crypto for cash. In 2021, the CBN announced a regulation that prevented financial institutions like banks from enabling crypto use. However, Nigerians were able to find a way forward and still maintain their leading position as the largest crypto hub of Africa through the use of P2P platforms.

Some community members believe this could affect the general interest of Nigerians who are yet to get on board the crypto digital ecosystem in acquiring digital assets.

A concerned Nigerian stated that the situation is causing some businesses to crumble. This is because unsuspecting entrepreneurs have received payments for their services with funds that were allegedly linked to the hacked amount, resulting in confusion and possible legal repercussions.

Related: Binance recommends P2P as Ukraine suspends hryvnia use on crypto exchanges

Despite strict crypto regulations by the CBN, the P2P market has aided Nigerian trade. However, a financial analyst known as Sadeik calls it a black market hub for scammers laundering fraud funds. Sadeik went on to say that a friend of his lost more than 500,000 because the person he transacted with had his account flagged in the Flutterwave hack.

In an official statement, Flutterwave denied the hack saying it identified an unusual trend of transactions on some users’ profiles and immediately launched a review in line with its standard operating procedure, which revealed that some users who had not activated some of our recommended security settings might have been susceptible. The statement adds that Flutterwave was able to address the issue before any harm was done to its users.

Magazine: What really goes on at a crypto OTC desk?

Nigerian crypto investors question central bank’s decision to flag P2P users

Crypto P2P users in Nigeria worry over using various platforms to transfer funds as the country’s central bank cracks down on bank accounts that received a share of Flutterwave’s rumored stolen funds.

Nigerian crypto investors using peer-to-peer (P2P) services have expressed concerns about the Central Bank of Nigeria flagging their bank accounts. CBN’s decision to flag accounts is believed to be in relation to the near $6.3 million (2.9 billion naira) Flutterwave hack, as the bank accounts have yet-to-be-proven affiliations with the hack.

According to local news sources, on Feb. 19, Albert Onimole, legal counsel for  Nigerian fintech company Flutterwave, reported to police in Yaba, Lagos, that almost $6.5 million (3 billion naira) had been illegally transferred from the accounts of his client.

On February 27th, a motion ex-parte was filed and granted in support of Flutterwave’s claims. According to the motion, 107 accounts, including their fifth beneficiaries, will be put on lien/Post-No-Debit (PND). So far, some of the locals have confirmed that their accounts have been frozen in connection to the hack.

The situation has gone on to discourage P2P users from interacting with the various over-the-counter (OTC) markets, which allow the trading of securities between two counterparties executed outside of formal exchanges and without the supervision of an exchange regulator. That’s because the hacked sum flowed into the Nigerian crypto market on different OTCs, and users now have problems with financial intermediaries when they want to use P2P services for crypto transfers.

Investors across the world use P2P as a medium of direct exchange of crypto between parties without the involvement of a central authority. They may choose to swap cryptocurrencies for cryptocurrencies or crypto for cash. In 2021, the CBN announced a regulation that prevented financial institutions like banks from enabling crypto use. However, Nigerians were able to find a way forward and still maintain their leading position as the largest crypto hub of Africa through the use of P2P platforms.

Some community members believe this could affect the general interest of Nigerians who are yet to get on board the crypto digital ecosystem in acquiring digital assets.

A concerned Nigerian stated that the situation is causing some businesses to crumble. This is because unsuspecting entrepreneurs have received payments for their services with funds that were allegedly linked to the hacked amount, resulting in confusion and possible legal repercussions.

Related: Binance recommends P2P as Ukraine suspends hryvnia use on crypto exchanges

Despite strict crypto regulations by the CBN, the P2P market has aided Nigerian trade. However, a financial analyst known as Sadeik calls it a black market hub for scammers laundering fraud funds. He went on to say that a friend of his lost more than 500,000 naira because the person he transacted with had his account flagged in the Flutterwave hack.

In an official statement, Flutterwave denied the hack, saying it identified an unusual trend of transactions on some users’ profiles and immediately launched a review in line with its standard operating procedure. The review purportedly revealed that some users who had not activated recommended security settings might have been susceptible to hacking. The statement added that Flutterwave was able to address the issue before any harm was done to its users.

Magazine: What really goes on at a crypto OTC desk?

Binance recommends P2P as Ukraine suspends hryvnia use on crypto exchanges

Following the temporary suspension from Ukraine’s central bank, crypto exchanges like Binance and Kuna made official announcements informing investors about the inconvenience.

Ukraine temporarily suspended the use of its national currency, the hryvnia, via banking cards for fiat deposits and withdrawals on crypto exchanges. While the move immediately impacted how investors move funds to and from exchanges, Binance reminded users about how peer-to-peer (P2P) services come in handy when trading cryptocurrencies.

Following the temporary suspension from Ukraine’s central bank, crypto exchanges like Binance and Kuna made official announcements informing investors about the inconvenience. Michael Chobanian, the founder of local crypto exchange Kuna, acknowledged the service disruption. However, he said he would explain the nuances of the development later.

Kuna founder Michael Chobanian recommends Bitcoin as Ukraine halts hryvnia use on crypto exchanges. Source: Telegram

Chobanian further pointed out how such regulatory decisions have no impact on the Bitcoin (BTC) ecosystem and added that:

“Regarding the hryvnia card and input/output to the exchange. Yes, it doesn’t work … We are looking for ways out of the situation, under the threat of stopping the entire Ukrainian crypto/card UAH market [translation].”

Binance acknowledged the problem as regulators suspended the use of hryvnia on crypto exchanges. However, Binance had an alternative solution:

“We suggest using the P2P service so that you can continue to use Binance comfortably.”

The crypto exchange utilized the occasion to inform users that P2P services allow users to exchange crypto and fiat currencies directly with other users without needing a middle-person like banks.

Related: Binance ‘not planning any layoffs,’ 500 roles to be filled in H1

Ukraine’s anti-crypto stance comes as a shock considering the country netted over $70 million in crypto donations since the start of the Russian-Ukrainian conflict.

Cryptocurrencies donated to Ukraine wallets provided by the Ukrainian government. Source: Chainalysis

“If we used the traditional financial system, it was going to take days […] We were able to secure the purchase of vital items in no time at all via crypto, and what is amazing is that around 60% of suppliers were able to accept crypto, I didn’t expect this,” said Ukrainian deputy digital minister Alex Bornyakov on Feb. 24.

LocalBitcoins closes down P2P crypto exchange service

LocalBitcoins’ customers have 12 months to withdraw their cryptocurrencies from the LocalBitcoins wallet but are advised to do so immediately.

Finland-based peer-to-peer (P2P) cryptocurrency platform LocalBitcoins is shutting down operations after serving its customers for more than 10 years.

LocalBitcoins officially announced the termination of services on Feb. 9, citing the tough market conditions of the ongoing cryptocurrency winter.

“Regardless of our efforts to overcome challenges and turn our trade volumes and declining market share back to growth, we have regretfully concluded that LocalBitcoins can no longer provide its Bitcoin trading service,” LocalBitcoins CEO Nikolaus Kangas told Cointelegraph. At the time of the announcement, LocalBitcoins’ team had 50 employees.

LocalBitcoins encouraged all customers to withdraw their crypto assets from the platform, asking them to proceed with withdrawing Bitcoin (BTC) from the LocalBitcoins wallet. According to the announcement, users can withdraw crypto assets from LocalBitcoins for 12 months. “However, of course, we encourage you to proceed with withdrawing sooner,” the firm noted.

According to the termination timeline, LocalBitcoins will immediately suspend all new registrations from Feb. 9. Trading will be suspended Feb. 16, while after that date users will only be able to login into the wallet to withdraw their funds.

LocalBitcoins’ abrupt closure comes soon after the United States Financial Crimes Enforcement Network mentioned the platform among the biggest Bitcoin senders to the Russia-linked exchange Bitzlato. U.S. authorities launched a major enforcement action against Bitzlato, accusing the firm of money laundering and allegedly facilitating circumvention of sanctions against Russia.

Jukka Blomberg, chief marketing officer at LocalBitcoins, denied any kind of cooperation or relationship with Bitzlato in a statement to Cointelegraph in January. He stated:

“Based on our data there have practically been no transactions between LocalBitcoins and BitZlato since October 2022, after we stopped serving Russian user accounts and accounts of users residing in Russia.”

Blomberg also stressed that LocalBitcoins has been regulated by the Finnish Financial Supervisory Authority since 2019 and strictly followed Know Your Customer and Anti-Money Laundering regulations.

Related: Binance blocks some accounts amid Bitzlato case: ‘Funds are safe’

As previously reported, Russia was once among the biggest markets for LocalBitcoins, topping Bitcoin trading volumes on the platform as of June 2020. Overall trading volumes on LocalBitcoins have been plummeting after reaching an all-time high in December 2017, according to data from Coin Dance.

Weekly LocalBitcoins volumes. Source: Coin Dance

Weekly Bitcoin trading volumes on LocalBitcoins dropped below 1,000 BTC in February 2021 and have never bounced back since. LocalBitcoins’s last recorded weekly BTC trading volumes amounted to 283 BTC, or about $6 million. In comparison, major exchanges like Coinbase trade $282 million in crypto on a daily basis, according to data from CoinGecko.

Bitcoiner sentenced to federal prison warns users involved in OTC trading

“I’m just a regular Bitcoiner caught in the crosshairs,” claimed Mark Alexander Hopkins, also known as Rizzn, prior to serving his prison sentence.

Mark Alexander Hopkins, also known by the moniker Doctor Bitcoin or their handle Rizzn, has claimed that “transacting Bitcoin p2p is a federal crime” after announcing the sentence in their case to social media followers.

In a Sunday Twitter thread, Hopkins said that they were facing between 6-15 months at a federal correctional institution in Texas following a guilty plea for allegedly operating a crypto business without the necessary licensing. According to Rizzn, the United States Financial Crimes Enforcement Network, or FinCEN, used a 2019 interpretation of a law — 18 U.S.C. 1960 — originally enacted in 1992 to charge them with illegally operating a “money transmitting business.”

“This means that any time anyone with a crypto trades p2p (i.e., not with an exchange), they’re legally liable under this statute as it’s currently interpreted,” said Rizzn. “In practice, this is a catch-all law. I was originally suspected of being a kingpin in this particular scam, and when it was clear I was not, they were able to easily build a case that I had not registered federally before selling my bitcoins.”

The Bitcoiner, who said they joined the space in 2011, claimed that they were “one of hundreds of thousands of OTC traders” in 2019 amid a bad actor involved in an illegal lottery scheme using the trading group to launder funds with Bitcoin (BTC) purchases. Rizzn claimed to facilitate fiat-to-crypto exchanges on behalf of the party — who they hinted did not know was being investigated for a crime — resulted in being targeted by U.S. authorities:

“I cooperated fully with the 15 armed FBI agents who raided my home in Oct of 2019. I wasn’t able to find a crypto-fluent attorney after I was raided in 2020 […] I was told that if I plead to the 18 USC 1960 charge, any actions against my family would be dropped.”

According to Rizzn, they were “fully registered as a Bitcoin seller with FinCEN” but the Justice Department still targeted them based on their involvement in the illicit transactions. Acting U.S. Attorney Prerak Shah said at the time that Hopkins “ignored federal law and allowed fraudsters to use Bitcoin to operate under the radar of law enforcement” and did not take steps to verify the source of the funds involved in the transactions — between $550,000 and $1.5 million at the time. Rizzn has disputed many of the Justice Department’s claims, saying that they performed the proper Know Your Customer and Anti-Money Laundering practices.

“Here’s the thing that makes this important to pay attention to and resolve: I’m a nobody,” said Rizzn:

“I’m not Ross. I wasn’t on the dark web. I’m not Edward. I didn’t work for the NSA. I’m not Julian. I didn’t break national secrets. I’m just a regular Bitcoiner caught in the crosshairs.”

Prior to entering prison, the Bitcoiner called for regulatory clarity between the state and federal levels in the U.S., seemingly in an effort to ensure other crypto users do not face the same enforcement action.

“In much the same way that the feds and states differ on cannabis usage, the Feds and the states are at odds about p2p crypto usage,” said Rizzn. “Delaware, Texas and Wyoming are actively promoting p2p crypto usage in such a way that they’re manufacturing hundreds of thousands of felons (like me!) every day. There needs to be a) clarity on how to be as compliant as possible and b) ideally a rollback of the overreaching guidance in the first place.”

Related: Central Bank of Russia tightens P2P transactions monitoring, including those in crypto

FinCEN leveled similar charges against a California resident in April 2019, alleging they wilfully violated money transmission laws while working as a P2P exchanger of crypto and fiat. However, the accused in that case faced only a $35,000 fine and was barred from similar financial activities — not prison time.

Tether, Bitfinex, Hypercore collab to launch encrypted P2P apps

The trio launched Holepunch with a vision to bestow control over data while breaking technology monopolies, among others.

Staying true to the “bear market is for building” motto, crypto exchange Bitfinex along with Tether (USDT) and Hypercore announced the launch of a fully encrypted platform, Holepunch, for building peer-to-peer applications. As part of the initiative, the trio launched Keet, an encrypted application capable of facilitating real-time audio and video calls, text chat and file sharing.

Partners aim to bestow control over data while breaking technology monopolies with Holepunch, according to the announcement. Tether and Bitfinex funded the development of the Holepunch platform. Paolo Ardoino, the chief technology officer of Tether and Bitfinex, will lead the new initiative as the chief strategy officer.

Speaking on behalf of Tether and Bitfinex, Ardoino highlighted the need to address the growing privacy concerns, stating:

“It [Tether and Bitfinex] believes that freedom of choice, communication and finances are the lifeblood of the future, and anything that will enhance those freedoms is worth amplifying.”

Holepunch currently operates as a closed source protocol in its alpha or pre-release phase, which will be moved to open source code by the end of 2022. In doing so, Holepunch will not use blockchain technology at its core and will instead move to an in-house payments API powered by the Lightning Network.

Developers building solutions on the Holepunch protocol will be able to use USDT as default for micropayments. However, the company is yet to disclose support for other cryptocurrencies and stablecoins.

Related: Web3 platforms launch the Open Metaverse Alliance

Blockchain-based metaverse and Web3 platforms joined hands to form Open Metaverse Alliance for Web3 (OMA3), an alliance built on four core principles — transparency, inclusiveness, decentralization and democratization.

As Cointelegraph reported, the alliance will focus its efforts on specific metaverse-related topics, which include setting standards for nonfungible tokens (NFTs), protocols, transferable identity, portals between virtual worlds, mapping and indexing.

Bitcoin trading volumes post new high in Philippines peso on Paxful

Weekly Bitcoin trading volumes in the Philippines peso grew steadily on Paxful this year and eventually hit a new high in July.

Despite some level of regulatory uncertainty around cryptocurrency in the Philippines, one platform has recorded a massive influx of Bitcoin (BTC) trading activity recently.

Bitcoin trading volumes in the Philippines have been on the rise over the past few months on the major peer-to-peer (P2P) crypto exchange Paxful.

According to data from the Bitcoin tracking website Coin Dance, Bitcoin trading volumes denominated in the Philippines peso (PHP) have been steadily growing on Paxful and eventually hit a new high in July.

Paxful’s Bitcoin trading volumes peaked at 111 million PHP ($1.9 million) during the week ending on Saturday, July 9, 2022. That was the biggest amount of PHP ever traded against Bitcoin on Paxful.

Paxful’s weekly Bitcoin trading volumes in PHP. Source: Coin Dance

The amount of actual Bitcoin traded on Paxful against PHP during that week was 92 BTC, slightly down from the previous week ending on July 2.

A notable influx in BTC trading started in early May, with Bitcoin trading volumes more than doubling over a period of months. As of early May, Paxful’s weekly BTC trading volumes in the Philippines amounted to just around 40 BTC.

Despite the recent upside in BTC trading volumes, the number of Bitcoins traded per week on Paxful in the Philippines is still yet to break the all-time high weekly volumes of 111 BTC posted in August 2020.

Paxful’s weekly Bitcoin trading volumes in the Philippines. Source: Coin Dance

The rise of Bitcoin trading on Paxful in the Philippines started amid a massive bearish trend in the cryptocurrency markets, with Bitcoin losing about 50% of its value since early May. BTC trading volumes in PHP surged even higher on Paxful after Bitcoin tumbled below $19,000 in late June.

The significant growth of PHP/BTC trading on Paxful also came amid the weakening local currency coupled with rising inflation. The Philippine central bank will reportedly decide whether to hike interest rates in mid-August amid inflation that is expected to grow above 7% by the end of the year from the current 6.1%.

The overall sentiment around crypto adoption in the Philippines has been rising in recent years as well, with many local firms moving into crypto trading. In April 2022, Philippines-based fintech firm PayMaya reportedly launched a crypto feature allowing users to trade, purchase and spend crypto on their accounts. The firm is among 19 official virtual asset service providers approved by the Bangko Sentral ng Pilipinas to offer virtual asset services.

Related: Binance ban off the cards, says Philippine trade and industry department

According to Terry Ridon, a local lawyer and convenor at the Infrawatch PH think tank, the rise in crypto adoption in the Philippines is a result of the COVID-19 pandemic.

“Crypto is becoming more popular in the Philippines because the country started shifting to digital payment systems during the pandemic. The ease of entry into the cryptocurrency markets through various apps has also allowed more people to participate in the sector,” he said in a statement to Cointelegraph.