Paxful Becomes First P2P Exchange to Partner With Chainalysis

Paxful exchange is trying to give peer-to-peer platforms a better name by onboarding crypto intel tools from Chainalysis

AccessTimeIconMar 24, 2020 at 6:00 a.m. UTC
Updated Sep 14, 2021 at 8:21 a.m. UTC

Peer-to-peer exchange Paxful has deployed Chainalysis’ cryptocurrency investigations and transaction intelligence software tools, the companies announced Monday in a joint press release.

The deal represents an about-face for Chainalysis, one of the industry’s most prominent crypto surveillance developers and regular partner of exchanges, governments and private companies. It had never signed on a peer-to-peer client because these firms were seen as too risky to conduct business with, said John Dempsey, Chainalysis’ vice president of Product.

“I think previously we categorically viewed P2P exchanges as a high-risk category,” he told CoinDesk.

In a P2P model parties move cryptocurrency directly between their wallets with no financial institution processing the trade. That represents a purer form of crypto dealmaking: bitcoin was envisioned as a decentralized P2P network, after all.

But P2P exchanges often play it fast and loose on the regulatory compliance front, said Chainalysis’ Marketing Director Maddie Kennedy. Some flout know-your-customer laws by allowing their users to work without an account, let alone identification required by law. 

That tainted the category’s reputation and made Chainalysis hesitant to partner with any P2P exchange. “This is a reputational risk for us,” said Dempsey, the Chainalysis exec.

Dempsey said Paxful came to Chainalysis looking for investigative tools. The company agreed to a partnership after seeing Paxful had “transformed its business model to prioritize compliance,” according to Kennedy. 

Paxful Chief Compliance Officer Lana Schwartzman told CoinDesk the exchange began pivoting in “early 2019” after it realized its future depended on toeing the regulatory line. She joined the company in late 2018.

Earlier that year, Paxful co-founder Ray Youssef had told CoinDesk his exchange was “redoing our entire KYC [know your customer] process.” 

The biggest playmakers in crypto are centralized exchanges. Binance, a Chainalysis partner, moved over $800 million in bitcoin (BTC) in the past 24 hours, according to Bitwise. Paxful’s not processed $30 million in the past week.


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.