The Stellar Development Foundation (SDF) announced at Consensus Hong Kong that TopNod, a non-custodial wallet, will integrate with the Stellar network. The move is part of SDF’s broader push into Asia — a region where it faces stiff competition from Solana, TON, and XRP in the payments and tokenization markets.

TopNod’s wallet uses key sharding and Trusted Execution Environment (TEE) technology to eliminate the need for seed phrases. The platform focuses on tokenized real-world assets (RWAs) and stablecoins rather than speculative tokens, though it remains a relatively young project with limited brand recognition outside Web3 circles.

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SDF Bets on Emerging Markets

In an exclusive interview with BeInCrypto, Stellar CBO Raja Chakravorti called Asia Pacific “a critical growth driver” and said SDF plans to build out anchor networks in Indonesia, the Philippines, and Vietnam over the coming year.

“We brought employees in the region focused on Singapore first, but we’ve really been focusing on expanding rapidly,” Chakravorti said, adding that more APAC financial institution partnerships would be announced over the next two quarters — though he declined to share specifics.

SDF has also partnered with MarketNode, a Singapore-based tokenization platform, and said it is in discussions with financial institutions about tokenizing money market funds in the region.

The ambition is clear, but execution remains the question. Stellar’s on-chain RWA value crossed $1 billion over the past year, and its DeFi TVL tripled. Yet XLM has fallen roughly 71% from its 2025 high of $0.52, underperforming both Bitcoin and Ethereum. Daily transaction volumes have held steady, but average transaction values have dropped, suggesting that core payment use cases persist while speculative and high-value capital flows have dried up.

2026: The Distribution Problem

Chakravorti acknowledged that tokenization alone is no longer the differentiator.

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“Last year was really about proving that tokenized products can be built at scale. This next year is really going to be about focusing on finding the right distribution outcomes for these assets,” he told BeInCrypto.

This is arguably Stellar’s biggest challenge. Franklin Templeton’s tokenized money market fund remains the network’s flagship RWA product, and US Bank recently announced a stablecoin partnership. But competing chains are moving fast — Solana and Polygon are both founding members of the same Blockchain Payments Consortium (BPC) as Stellar, and networks like Ethereum and Avalanche continue to attract institutional tokenization projects.

Privacy vs. Compliance

Stellar’s recent X-Ray upgrade (Protocol 25) introduced native zero-knowledge cryptography. Chakravorti framed this as an institutional necessity rather than a privacy-maximalist play.

“Privacy elements may encompass send, receive, who is the holder — but importantly, these have to be auditable,” he said. “The privacy may look slightly different depending on who you’re talking to.”

Whether this configurable approach satisfies both regulators and privacy-conscious users in Asia’s diverse regulatory landscape remains to be seen.

What’s Next

SDF confirmed its annual Meridian conference will move to Abu Dhabi in October 2026. The TopNod integration is expected to go live across the Philippines, Singapore, Japan, and other Asian markets, though no specific timeline has been provided.

For Stellar, the formula is familiar: strong infrastructure, growing institutional interest, and a clear narrative. The missing piece — as Chakravorti himself admitted — is distribution at scale.

In a high‑profile enforcement action, Paxful, the peer‑to‑peer crypto exchange, was ordered to pay $4 million after admitting it knowingly profited from criminals who used its platform due to lax anti‑money laundering controls. The Department of Justice outlined that Paxful pleaded guilty in December to conspiring to promote illegal prostitution and knowingly transmitting funds derived from crime, in violation of federal AML requirements. The government also detailed that, between January 2017 and September 2019, Paxful facilitated more than 26 million trades valued at nearly $3 billion, earning about $29.7 million in revenue while turning a blind eye to illicit activity. The case centers on how a platform marketed itself as a lenient, low‑information exchange while neglecting core safeguards. The DOJ’s filing underscores that Paxful’s business model depended on attracting criminal users by downplaying compliance obligations.

The Justice Department highlighted that Paxful had agreed the appropriate criminal penalty would be $112.5 million, but prosecutors determined the company could not pay more than $4 million. The settlement reflects a broader push by federal authorities to curb crypto platforms that fail to implement or enforce anti‑money laundering measures, particularly when they facilitate illegal activities such as fraud, extortion, prostitution, and trafficking. The department said Paxful profited from moving money for criminals it attracted with the promise of minimal compliance, a dynamic prosecutors described as corrosive to legitimate finance and to users seeking lawful services.

The case traces to Paxful’s ambitious growth period from 2017 through 2019, when the platform reportedly handled tens of millions of trades and generated substantial revenue despite warnings from investigators about AML gaps. Prosecutors maintained that Paxful’s marketing messaging, which emphasized a lack of required customer information, paired with policies it knew were not implemented or enforced, created a permissive environment for illicit actors. The backers of the case say this approach allowed criminal actors to route funds through Paxful more readily than through regulated channels.

The Justice Department’s description of Paxful’s operational ethos is complemented by a notable cross‑industry connection: the crypto platform had ties to Backpage and a similar site during a period spanning 2015 to 2022, a relationship the government says contributed to Paxful’s profits, estimated at about $2.7 million. While Backpage’s platform was shut down due to illegal activities, the Paxful alliance is cited as a concrete example of how illicit networks exploited crypto rails to monetize wrongdoing. The department noted that Paxful’s founders publicly boasted about the “Backpage Effect,” portraying the collaboration as a catalyst for growth, a claim the government used to illustrate a deliberate strategy of enabling criminal transactions.

The case also sheds light on Paxful’s eventual exit from the market. The exchange halted operations in November, and its October closure‑announcement post—later archived—depicted the decision as a response to “the lasting impact of historic misconduct by former co‑founders Ray Youssef and Artur Schaback prior to 2023, combined with unsustainable operational costs from extensive compliance remediation efforts.” Youssef publicly countered the timing of the closure, suggesting the firm should have closed when he left the company. Meanwhile, Schaback, Paxful’s former chief technology officer, pleaded guilty in July 2024 to conspiring to fail to maintain an effective AML program and awaits sentencing, with a California judge moving his hearing from January to May to accommodate ongoing cooperation with authorities. The DOJ’s account makes clear that a broader reckoning—beyond Paxful’s leadership—extends into the company’s users, employees, and the broader crypto ecosystem.

As authorities pursued the case, officials emphasized that the Paxful matter is not an isolated incident but part of a wider effort to tighten regulatory expectations on crypto marketplaces. The department pointed to the need for robust know‑your‑customer checks, comprehensive AML compliance programs, and proactive monitoring of suspicious activity to deter illicit uses of digital assets. The implications extend to other platforms that operate in the same space, signaling that permissive, low‑oversight models will attract intensified scrutiny from federal law enforcement and regulators.

Key takeaways

• Paxful received a $4 million criminal penalty after pleading guilty to conspiracy related to illegal activities and AML violations, with prosecutors noting a potential maximum penalty of $112.5 million.
• From 2017 through 2019, Paxful facilitated more than 26 million trades valued at nearly $3 billion and amassed around $29.7 million in revenue, according to DOJ filings.
• The DOJ characterizes Paxful as profiting from enabling criminals by downplaying AML controls and failing to comply with applicable money‑laundering laws.
• Prosecutors linked Paxful to illicit revenue streams via partnerships with Backpage and similar platforms, describing profits of about $2.7 million tied to those connections.
• The company shut down operations in November, citing historic misconduct by former co‑founders and the costs of compliance remediation, with ongoing legal actions surrounding Schaback’s case and the broader investigation.
• The case illustrates how enforcement agencies are escalating scrutiny of crypto marketplaces that permit lax due‑diligence and high‑risk activity, reinforcing expectations for AML programs across the sector.

Sentiment: Bearish

Market context: The Paxful action aligns with a broader tightening of crypto‑AML standards as regulators seek to normalize compliance expectations across peer‑to‑peer platforms, exchanges, and other digital asset services, influencing liquidity, risk sentiment, and enforcement tempo across the industry.

Why it matters

The DOJ’s settlement with Paxful underscores a pivotal moment for the crypto‑platform landscape. For users, it signals that providers must demonstrate verifiable diligence in their AML programs or face tangible penalties and reputational damage. For operators, the case reinforces the need to align platform design, user onboarding, and transaction monitoring with established legal requirements rather than relying on marketing narratives about anonymity or minimal information. The development also matters for builders and policymakers. It highlights the costs of lax controls and the potential for illicit activity to undermine trust in decentralized finance ecosystems, prompting crypto firms to invest more heavily in compliance technology, real‑time surveillance, and robust governance frameworks.

From an investor perspective, enforcement actions like this can influence risk pricing and funding cycles for crypto platforms, particularly those with international user bases or complex payment rails. The Paxful narrative—centered on public statements by founders, internal policy gaps, and late‑stage remediation—serves as a cautionary tale about the fragility of business models that rely on permissive compliance postures. In a market where users increasingly demand transparency and regulatory alignment, the case emphasizes why credible AML programs are not merely a legal checkbox but a core driver of platform reliability and long‑term viability.

What to watch next

• Schaback’s sentencing timing remains fluid, with a May hearing continuing to unfold as prosecutors incorporate ongoing cooperation into the government’s recommendation.
• Any additional actions or disclosures related to Paxful’s former leadership could emerge as part of related investigations and settlements.
• Regulators may intensify scrutiny of other P2P exchanges and non‑custodial marketplaces to assess AML controls, monitoring capabilities, and enforcement readiness.
• Broader market reactions might reflect shifting risk sentiment as platforms adjust compliance investments and governance standards in response to high‑profile enforcement cases.

Sources & verification

• U.S. Department of Justice press release: Virtual Asset Trading Platform sentenced for violating Travel Act and other federal crimes (link provided in the DOJ filing).
• DOJ Criminal Division official X/Twitter post confirming the case details and sentencing status.
• Paxful closure announcement (archived): Paxful closure announcement, noting misconduct and remediation costs.
• Statements and coverage surrounding Ray Youssef’s response to Paxful’s closure and Artur Schaback’s guilty plea.
• Related reporting on Paxful’s alleged “Backpage Effect” and the platform’s historical collaborations cited by prosecutors.

What the story changes

The Paxful case illustrates how enforcement actions tied to AML controls can reshape the operations and viability of crypto platforms that rely on rapid growth and minimal compliance. By tying significant penalties to proven misconduct and highlighting explicit links to illicit activities, authorities are sending a clear signal: robust, transparent AML programs are foundational, not optional. As the industry evolves, platforms may need to reassess their onboarding, transaction screening, and governance practices to withstand heightened regulatory scrutiny and to restore or preserve user trust in a landscape that continues to balance innovation with accountability.

Institution-focused crypto lending platform BlockFills announced it halted customer deposits and withdrawals last week as Bitcoin and the broader crypto market continued to tumble. 

The suspension, which remains in effect, was intended to protect clients and restore liquidity on the platform, BlockFills said in an X post on Wednesday.

Last week’s market tumble saw Bitcoin fall another 24% from $78,995 to $60,000.

Blockfills said the withdrawal and deposit halt came “in light of recent market and financial conditions.”

“Management has been working hand in hand with investors and clients to bring this issue to a swift resolution and to restore liquidity to the platform,” BlockFills said.

“Clients have been able to continue trading with BlockFills for the purpose of opening and closing positions in spot and derivatives* trading and select other circumstances,” BlockFills added.

The halt potentially impacts about 2,000 institutional clients, including asset managers and hedge funds, which contributed to more than $60 billion in trading volume on the platform in 2025.

The crypto liquidity and lending platform serves only investors with crypto holdings of $10 million or more.

BlockFills was founded by CEO Nick Hammer and President Gordon Wallace in 2017 and is backed by the likes of Susquehanna Private Equity Investments and CME Group.

Bitcoin is down 46% from its October high

Bitcoin’s price began to fall on Oct. 10 after a social media post on tariffs by US President Donald Trump sent shockwaves through the crypto markets, contributing to nearly $20 billion worth of positions being liquidated.

It fell further in the months following, hitting a year-to-date low of $60,008 on Feb. 5.