A bitter dispute in a Delaware court between Paxful co-founders Artur Schaback and Mohamad (Ray) Youssef may have been the real reason for the abrupt shutdown of the Bitcoin market on April 4.
Schaback and Youssef, who founded Paxful in 2015 out of a shared passion for Bitcoin, according to court documents, are now suing for control of the company and making multiple allegations against each other. The allegations include misappropriation of company funds, money laundering and evasion of U.S. sanctions against Russia, among others.
Schaback, who served as Paxful's chief operating officer until February 2022, was allegedly barred from the company's operations over disagreements with Paxful's CEO, Youssef, over the future and operations of the marketplace, including concerns over "increasing spending." Legality” conflicts with undisclosed entities. " According to Schaback in the lawsuit, a large amount of Paxful’s bitcoins was transferred to a Turkish entity called “EMiR,” which he claimed was not a legitimate software company. "It has no website promoting software or web development services, and its physical address appears to belong to a clothing company."
Dekslektika, a St. Petersburg, Russia-based company owned by former Paxful directors, was a subcontractor that allegedly received payments from EMiR. The entities are accused of being behind "large-scale irregular transactions" that began after Schaback was frozen out of the company's operations, according to court documents. "These transfers had no legitimate business purpose," the suit says.
Yusuf categorized the claims as “absurd.” According to him, the charges revolved around payment of salaries to a Turkish engineering firm that worked for Paxful. “He [Schaback] blocked the pay of our engineers with these allegations, claiming they were fake and that they didn’t even provide such services. He played a crazy game of chicken until the entire team of 80 engineers stopped working. Mr. Schaback himself was forced to admit that this was a serious mistake and authorize the backpayment of these engineers at the board meeting,” Youssef noted. Youssef claimed his co-founder's legal tactics "bordered on terrorism" and cost many of Paxful's employees and directors. “His accusations were so slanderous that we lost our GC, CTO, CISO, VP of Finance and VP of HR. He even attacked our law firm, McDermott Will and Emery, the most respected one of the law firms that asked them to be exempted from representing us in Delaware,” he told Cointelegraph.
With his team's imminent resignation, Youssef said it was impossible to keep Schaback at Paxful. Youssef unilaterally shut down Paxful on April 4, Schaback said. Yusuf's actions are aimed at consolidating power in jurisdictions outside the United States and removing me and other shareholders from his plans. "
Schaback said he had limited access to company information and had not been involved in day-to-day operations for 18 months.
"Mr. Youssef and I have fundamental disagreements over Paxful's product direction and corporate governance, and you can tell from his current actions that his goal has always been to remove Paxful from US jurisdiction due to regulatory pressure."
