Peer-to-peer (P2P) crypto exchange Paxful is shutting down its operations in Venezuela, apparently, to comply with U.S. economic sanctions against the leftist government of disputed president Nicolas Maduro.
On Tuesday, a Paxful spokesperson told news.Bitcoin.com that the exchange will now start restricting new accounts and closing old ones, as part of the shutdown process.
“Current users will have 30 days to withdraw their funds without fees and will be notified directly via email on how to do so,” said the spokesperson, in a statement shared on email. “Venezuelan users who have completed address verification that confirms they are living abroad will be able to continue trading on Paxful.”
The North American exchange claims the decision “comes with great disappointment”, but had to insulate against potential punitive outcomes on its worldwide operations. It cited strict regulations from the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC). The spokesperson explained:
Due to concerns regarding the regulatory landscape around Venezuela and Paxful’s own risk tolerance, we regret to report that Paxful will be ceasing operations in Venezuela. We made our best efforts for several months but with current risks, we had no choice but to make this incredibly difficult decision.
The U.S does not recognize Maduro’s government following a disputed 2018 election. Instead, it considers opposition leader Juan Guaido as the Latin American country’s legitimate president due to his position as speaker of parliament. According to the OFAC sanctions, US citizens are prohibited from doing business with the Venezuela government or with government-owned businesses, among other restrictions.
Matt Ahlborg, the creator of crypto analytics firm Useful Tulips, said U.S. sanctions against any country should accelerate bitcoin adoption. He tweeted: “US compliance burdens equate to the idea that it is ‘better to block a million good users than let one bad user in!’ This is why we Bitcoin.”
Apparently, data from Useful Tulips shows that business was thin for Paxful in Venezuela. Over the past seven days, just about $25,000 worth of BTC exchanged hands on the platform, compared to $4.5 million traded on rival Localbitcoins in the same country.
Paxful had previously restricted Venezuelan customers from making some transactions. It banned the use of accounts from the Bank of Venezuela a few months back and later prevented transactions involving the use of the Petro, a government-issued cryptocurrency.
The exchange said if things change regarding Venezuela, it will start offering its services again. “We truly hope that Paxful will have another opportunity to enter the region again in the near future,” it stated.
What do you think about Paxful exiting Venezuela? Let us know in the comments section below.
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