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Ray Youssef of Paxful – Cointelegraph Magazine



“I’m coining this term right here, right now,” Ray Youssef declares. “Financial Apartheid.”

The CEO and co-founder of Paxful is on a mission. “It’s what has held Africa back more than anything else.”

“How advanced would the United States be if you couldn’t send money from New York to Florida? From New York to California? From Oregon to Washington? It wouldn’t be the United States! It would be a mess of all these squabbling little city-states that can barely get it together.”

Youssef is passionate about transforming the world by enabling the free flow of money everywhere. This can only be accomplished, he says, with a people-powered marketplace.

“Cryptocurrency is just a piece. We use that as a technology, but it’s the people that make it work. It’s peer-to-peer just like Napster, Uber, Airbnb, Craigslist, all of it. This is the last piece needed so that technology can truly disrupt finance.”

Bitcoin by itself, Youssef says, is not enough.

Paxful values learned at the newsstand

Youssef reflects on his first job in Hell’s Kitchen in the 80’s, when New York was “a rough place.” He hauled huge stacks of hundreds of newspapers, delivering to hotels around Central Park. “I was like eight or nine years old, but I was a monster.” Lugging a hand truck of papers around the neighborhood, he would collect up to a thousand dollars in cash by the end of a night’s run. “That’s a lot of money for an eight year old boy to be carrying around!”

His parents worked non-stop. Immigrating from Egypt, his father started out as a lowly dishwasher before saving up enough money for the family to join him in America. Eventually, the parents started a modest newsstand business with a little help from some friends, where Youssef worked as a teller. “That’s where I learned how to handle money and handle people.”

Youssef learned to connect with people on the street. Staying connected to everyday people is a key value that Paxful espouses, he says.

This value continues to ring true for Youssef now, as his company strives to build for the needs of its users. The tendency in the tech industry, he says, is to avoid connecting with people on the street. But a successful company is open to learning about the problems users are experiencing and where they need help.

One particular event from his childhood informs his current role. Walking with his parents in a crowded New York street, he remembers seeing a man drop a wallet, stuffed with about a thousand dollars in cash. “A thousand bucks would have been a huge boon to us at the time. But what did my father do? He picked up that wallet, and he ran after the guy that dropped it…” The man simply thanked his father and walked away, but the moment left a lasting impression on Youssef. 

“Honesty is number one. We’re in the money business. You have to have people you can trust. My co-founder, Artur [Schaback], I trust him. He is my brother. More than my brother. I never had a real brother but Artur is my brother. We both love and respect each other and trust each other completely. You need that in this business.”

Building for the future

He wonders what the current bullish sentiment might do to new naive investors who are testing the waters of crypto markets for the first time. “What’s gonna happen after [the bull run] is the question. Are all the retail investors gonna get burned again?”

“Or are we actually going to build real structure around this thing we love called cryptocurrency, called Bitcoin? To enable real use-cases to happen?” Institutional money will fully enter the scene, Youssef suggests, when use-cases are genuine and cryptocurrency is not just a speculative asset class.

Making that happen requires some serious hustle, he believes. Pointing again to the legacy of his parents, he learned what it meant to work hard. “My mother and father worked so damn hard. Eighteen hours a day would be an easy day.” As a youth, Youssef watched immigrants from Greece, Colombia, and from all over Africa working non-stop to find success in America. It was this aggressive hustle, a “maniacal drive,” Youssef says, that instilled the spirit of entrepreneurship in him.  

This same fanatical passion has carried over to Paxful, Youssef says, with the goal of building the best product team in the world, focused on customer service. Seeing how good his parents were with people, Youssef is striving to follow in their footsteps. “They can do that in a newsstand, we can do that in financial services.” 

The banks, he says, have forgotten this. They simply don’t care. “So here we are to care. People really appreciate that, especially when it comes to money.”

Pondering his family’s legacy caused Youssef to pause in a moment of gratitude. “I can give thanks now for those things.” 

Failure to launch

Youssef experienced his fair share of failures before finding success with Paxful. Starting with computers relatively late at the age of 19, he learned to code in a number of languages. He soon developed proficiencies around architecting systems, building structures and integrating with products. With his newfound skills, he began looking for problems to solve.

His first solution to garner attention centered on ringtones with a startup called MatrixM, “the Napster of ringtones.” Youssef single-handedly built a peer-to-peer service where users could upload ringtones and send them to other users via SMS. 

“It blew up overnight,” Youssef explains. The service generated a million dollars in revenues after a mere six months of existence.

“It was a huge success and I was the only guy in the company! I built the whole thing myself. All the code.” Youssef shared the success with his mother, buying her a home in New York with the money he made. But a lingering problem remained. Music publishers were not too keen to see outside parties getting a piece of the lucrative action. Even with what seemed to Youssef like a very generous offer, publishers refused to cooperate, insisting on being paid every single time the ringtone would go off on a user’s device.

“That’s what I went up against in my youth. It was a rough lesson.” 

Along with a number of other startups that fizzled out, this disappointing failure turned Youssef off technology for a while, during which he says he “went insane,” running away from his troubles and turning to a nomadic lifestyle, boxing and engaging in MMA as well as traveling throughout Asia visiting and praying at every temple he could find along the way.

“My one big mistake was that I did not ask for help. I was a one-man army and I was so proud of that, and so proud of how smart I was. I was arrogant. I couldn’t ask for help and properly scale.”

Since then, Youssef says, he has learned to be more humble and to accept help. “God has broken me,” he says. He admits he is very stubborn, so the change to a more humble outlook took some convincing.

“Pharoah is a great example [of stubbornness]. How long did he defy the God of Moses and Abraham before he finally got the message? Only when he was drowning. But God was more gentle on me. I came to a point where I had to ask God for help and I got it.”

Just six years ago, Youssef and Paxful co-founder Schaback were homeless for a period of about two months, bouncing from couch to couch and living on the streets. Sometimes, Youssef confesses, he would spend nights wandering aimlessly around town. After so many startup failures, he had burned through all of his life savings and “felt like a loser.”

Still, he was motivated to press on by the desire to provide for his mother, he says, returning to the game in order to get his mother another house after a divorce. Youssef returned to building startups, focusing on file-sharing technology while also writing blogs on health and natural philosophers. The missing link in every single previous startup, he explains, was always the problem of payments. Payments, Youssef says, is the last major barrier, but it can be overcome with cryptocurrency technology.

In 2013, Youssef started hearing more about Bitcoin and was attracted to its potential for helping people. He particularly saw the potential for cryptocurrency as a tool to help people in Africa. Bonding with Schaback at a Bitcoin meeting in Manhattan, the pair soon started working together, creating a point of sale Bitcoin merchant tool called EasyBitz. Despite Youssef’s newfound enthusiasm, it didn’t get a whole lot of traction, at first. It wasn’t solving a problem anyone had at the time. 

Building Paxful

Youssef and Schaback eventually created Paxful, pivoting with EasyBitz toward providing a peer-to-peer financing platform for trading Bitcoin. The goal was to make exchanging value easier and more accessible for everybody, from businesses to individuals. 

He is grateful for the life lessons that have brought him here. “I needed all of that. I really did. Every single one of those taught me something. Some of them taught me about marketing. Some taught me about positioning. Some taught me about technical challenges, architecting, sharing with people, but almost all of them were peer-to-peer in some way, very much oriented around people.”

Now, Youssef explains, Paxful can do something real because “We can touch money. That’s what blockchain has given us.” 

Blockchain frees the financial system from what Youssef sees as an oppressive and unjust regime. “This is like the last boss. Central banks, the financial system: it’s warped, broken, closed off, compartmentalized, segregated. Basically, it’s under a regime of financial apartheid.”

Pax Africana

In Africa, Youssef explains, sending money from one country to a neighboring country is a nightmare, as Steve Msoh demonstrated earlier this year in a feature for Cointelegraph Magazine.

It’s easier, in fact, to transport yourself, he says. This legacy of Imperialism can be traced back to the 1400’s, with currency that remains under the control of colonial powers like France. Countries throughout Africa to this day do not have a sovereign money system (as Akon noted, in his own Journey in Blockchain), forcing unjust limitations on people throughout the continent. 

African money, Youssef says, is not treated like money from other parts of the world. It’s heavily scrutinized and much more vulnerable to destabilization. “They’re used to it but when I hear about it, it’s like, this is diabolical stuff. It really is.”

“This is what we’re doing. It’s a crusade against financial apartheid.”



Led by Paxful, Pax Africana is an initiative funded through the charitable BuiltWithBitcoin Africa Fund. To advance Africa’s economies and bring them to the global stage, Pax Africana embraces priorities such as streamlining interoperability between money networks, and enabling intracontinental payments and remittances. Thus, the initiative “reaches the masses,” offering a connection to what Youssef describes as the golden circle of finance: the West.

The initiative also provides for the building of sustainable water supplies. With one project already built in Rwanda and another underway, as well as progress on a third in Kenya, Paxful plans to clone the sustainable water supply systems across the continent. Youssef hopes that this will provide safe, clean water to millions and will allow children to attend school instead of spending up to six hours of their day traveling to fetch water. “Wouldn’t that be a huge boon to the GDP of Africa? That would make such a difference.”

BuiltWithBitcoin funds will also be used to build schools throughout the continent, with plans to construct 100 schools. The goal is not only to build the schools, but to provide maintenance and upgrades such as kitchens, clinics, sports fields, solar panels, and tablets. The grand opening of a school in Kenya is due for September, Youssef says.

In addition to the fundamental economic needs of money transferral, water and schools, Paxful funds incubators; places of higher learning and investment in entrepreneurs. Africa’s greatest natural resource, Youssef says, is its people; their heads and their hearts. He explains the continent of more than a billion citizens contains millions of unemployed geniuses, offering an immense opportunity and potential for growth.

Pax Africana offers Africans the opportunity to connect to the world through the Pax Citizen program. Youssef envisions villagers enjoying access to phones with free data, messaging services and verifiable identification. This “citizen kit”, Youssef explains, opens the world to Africa’s people. “That’s what you need to be a citizen in this world. You need a phone. You need data. You need some kind of verification ID. If you have these things, Boom! You’re on the map.”

Continuing the crusade

There’s an expectation in life that we build on our careers. Youssef is a prime example of someone who has actively built his character.

From the arrogant one-man army behind the failed MatrixM startup to a more humble leader who depends on the success of the people around him, Youssef acknowledges both his past flaws and the work he continues to put into his life.

To further address the issues of ‘Financial Apartheid’, Youssef explains that Paxful is launching the Peer-to-Peer Alliance, in which members donate to BuiltWithBitcoin and share data volume. The goal of the alliance is to increase transparency in finance, particularly among OTC, centralized and decentralized exchanges. “This is what humanity needs,” Youssef explains, “To build together.”

Youssef reflects on his spiritual life, citing a return to his faith as a key to success. “What I need every single day is, I need to pray. I pray every day.” The mind grows weaker without prayer, he says, as the weight of the world weighs us down, especially during difficult times. Every day, he says, your soul needs to recharge.

“Things are going to get great for us,” Youssef insists confidently, “The world is going to enter into a golden age, but we’re going to be hit by more of these challenges like COVID. We just have to stay strong through it all. It’s going to pass. And the point is, we’re still building through it all.”


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South Korea’s small crypto exchanges face increasing regulatory heat




Authorities in South Korea are continuing to propose and enact measures aimed at maintaining strict oversight over the nation’s crypto exchange market. These come amid a significant uptick in cryptocurrency trading volume, especially for altcoins.

In May, South Korea’s Financial Services Commission (FSC) announced that the government is planning to enforce stricter regulatory policies on cryptocurrencies in general. This move comes as virtual asset service providers (VASPs) have been given until September to register with the appropriate state authorities.

Crypto exchanges in South Korea were already under pressure even before this new set of stricter regulatory policies. The requirement for real-name trading accounts has seen smaller- and medium-sized exchanges scramble to secure licenses from commercial banks to no avail, at least as of the time of writing.

Recently, reports have emerged of another policy move from South Korean authorities that could have far-reaching ramifications, even for the “Big Four” crypto exchanges in the country — Bithumb, Coinone, Korbit and Upbit.

FSC shines spotlight on cross trading practice

As previously reported by Cointelegraph, the FSC is planning to ban cross trading on crypto exchanges in the country as part of a raft of stricter regulatory measures for trading platforms. Cross trading is a method used by trading desks to offset buy and sell orders for the same asset without recording the transactions on their order book.

Cross trading, while illegal in many countries, is in some ways a necessary practice for crypto exchanges in South Korea. For one, crypto trading in the country is denominated in Korean won, but fees are collected in cryptocurrencies.

Cross trading offers a solution for South Korean crypto exchanges, allowing them to convert trading fees to Korean won by performing the conversion right on their platform. With the FSC banning the practice, these exchanges may now have a hard time realizing the significant revenue stream that comes from collecting trading fees.

Indeed, the initial responses from some industry commentators to the planned move are that a cross trading ban would serve as a revenue chokepoint for South Korean crypto exchanges. The FSC’s ban, if passed, would mean mandatory zero-commission trading by platforms in the country.

South Korean crypto exchanges charge 0.05% on average as trading fees. This means that in the first quarter of 2021, Upbit raked in almost $9 million in fees daily from a 24-hour turnover of about $17.9 billion. Indeed, the sizable surge in South Korea’s crypto trading volume in 2021 has meant greater fee revenue for platforms.

As early as February, Bitcoin (BTC) turnover for both Bithumb and Upbit was already upward of 11 times greater than the figures recorded for the same period in 2020. Earlier in June, Cointelegraph reported that bank account flows for exchanges in the country were up 40% over the past year.

The revenue growth for South Korean crypto exchanges has even had a trickle-down effect on banking partners and investors. Upbit’s primary banker, K Bank, enjoyed a sharp turnaround in its financial performance and is reportedly targeting 2022 for an initial public offering.

While Bitcoin fever characterized the early crypto trading mania of 2021, the trend pivoted to altcoins as the year progressed. With token prices surging parabolically up until May, South Korean crypto traders seemed to favor smaller-cap altcoins.

Such was the extent of the altcoin trading mania that the Korea Federation of Banks warned of the trend’s potential risks. At the time, the order books of even the Big Four showed BTC trading activity accounting for less than 5% of their 24-hour trading activity, which was significantly lower than the global average for Bitcoin on other platforms.

None of our business, says the FSC

As is often the case with regulatory measures in South Korea, the smaller exchanges might face significantly greater operating difficulties if the FSC’s cross trading ban becomes law. Assuming that platforms will be loath to forgo the revenue from trading fees, South Korea’s cryptocurrency exchanges will have to come up with an alternative.

The most probable alternative would be to create a separate trading desk dedicated to converting crypto trading fees to Korean won. However, any new crypto trading-related venture in South Korea must be registered with FSC’s Financial Intelligence Unit and adhere to strict Anti-Money Laundering (AML) laws.

This registration comes with a significant cost burden that might be too much for the smaller platforms still struggling to meet the September licensing deadline. Another possible option for exchanges would be to partner with loan providers open to accepting crypto as collateral.

Related: South Koreans flock to crypto amid a heavy-handed regulation approach

Regardless of the route chosen, exchanges can ill afford to avoid coming up with a solution to the problem if cross trading is banned by the FSC. Apart from the obvious revenue implications, crypto trading fees also attract withholding tax levies.

For the FSC, this particular problem is one the exchanges will have to solve by themselves. Supporting its decision to pursue a cross trading ban, the commission stated that allowing exchange operators to trade against their customers constitutes a conflict of interest with significant price manipulation risks.

As to the issue of finding alternative means of repatriating trading fees to Korean won, the FSC said: “Whether you want to change cryptocurrency to another asset (other than won) or to keep cryptocurrency, you need to find a solution yourself.”

Is this it for smaller exchanges?

Responding to Cointelegraph’s request for comments, a foreign-media relations spokesperson for the FSC stated:

“As the authorities are currently working on amendments to the relevant law, it would be inappropriate to comment on your questions right now with specific measures still being drawn up. When specific measures are ready for announcement, we will put them up on our website.”

For Lee Chul-ie, CEO of South Korean cryptocurrency exchange platform Foblgate, the proposed cross trading ban is simply another blow for smaller exchanges in the country. Speaking to the Financial Times, Chul-ie remarked: “We are facing an existential crisis. We want to legitimise our business but banks are reluctant to offer us real-name accounts.”

According to the exchange operator, additional problems like cross trading bans could push smaller platforms outside the country or to seek “grey areas” to circumvent stringent regulatory measures.

However, Jeff Kang, South Korea country manager at blockchain security outfit CoolBitX, is of the opinion that some smaller exchanges will be able to manage the situation. In a conversation with Cointelegraph, Kang opined:

“While it appears that increased oversight from the South Korea FSC might be daunting news for the local cryptocurrency industry, the situation is not as dire as it seems. The Korean government’s stance on cryptocurrencies is not to totally stamp out its use, but to account for consumer protection and to eradicate financial terrorism and money laundering.”

According to Kang, the FSC’s goal is not to force exchanges out of the country but to ensure robust AML compliance protocols, adding: “In light of this, cryptocurrency exchanges will have to signal their committed stance to double down on compliance efforts in order to achieve licenses by the September deadline.”

Kang also said that as many as six other exchanges are close to receiving real-name trading account licenses, to bring the total number to 10. However, even if that happens, there will still be over 50 exchanges in South Korea with uncertain regulatory status that will probably be forced to shut down their operations come the September deadline.

For banks, their reticence in dealing with exchanges comes from the fact that financial institutions in South Korea can be held liable for the misdeeds of their cryptocurrency exchange partners.

This situation might be due for a change, with discussions underway between banks and the FSC to limit the liability of commercial banks in the event of any misdeeds committed by their crypto exchange clients. These discussions are also part of a larger agenda that will see banks classify crypto exchanges as high-risk clients.