Bitcoin Pushing Credit Cards out of Thriving Sex Industry

Bitcoin (Rick Bowmer / AP)
Rick Bowmer / Associated Press

With law enforcement going after online sex trafficking of minors with a vengeance, Bitcoin virtual currency is becoming the preferred coin of the realm for the sex industry.

Police and the FBI have battled escort services for decades in an effort to root out underage sex trafficking. Their most effective tool has been following credit card transactions and threatening to publish data on sex consumers’ actions and payments.

Negative publicity badgered Craigslist into shutting down escort advertising on its adult content sites in 2010, despite huge and profitable traffic.

After Cook County Illinois Sheriff Tom Dart called a news conference this summer to detail how he made 800 arrests for child prostitution over the last six years by tracking credit card payments, Visa and MasterCard were shamed into cutting-off processing of transactions for Backpage’s adult website.

Dart claimed that his effort was part of a crackdown on criminal sex traffickers who “prey on the weak and vulnerable.” He argued that the use of credit cards in the “violent” sex industry “implies an undeserved credibility and sense of normalcy” to illegal transactions and increases the demand for “women and girls” who are often supplied through “coercion and violence.”

But the announcement outraged so-called “sex workers” across the globe, who said they were losing a convenient way to get paid. They claimed that Backpage and other web services allowed sex workers to avoid pimps, abusive street clients, and robbers looking for cash. They also praised forums like Backpage for providing a way to screen potential clients and stay aware of medical issues.

Kristen DiAngelo, a trafficking survivor and advocate with the Sex Worker Outreach Project (SWOP) in Sacramento, California complained, “These efforts are misguided and will cause significantly more harm to those in the sex trade, including trafficked individuals.”

Backpage has filed suit against Sheriff Dart, and started making its escort ads free. The free Backpage adverts spurred a blizzard of listings. But “free” is a flexible term. Advertisers who want to make their Backpage ads prominent are now being charged a premium.

Now, six months later, bitcoin cyber currency seems to have taken over the sex trade. With no central bank or embarrassing payment processing trail for authorities to follow, bitcoin provides the ultimate financial anonymity.

According to a National Public Radio report, CEO Ray Youssef at bitcoin dealer Paxful Inc. said, “the Backpage Effect” has been great for his business by opening up a huge new stream of virtual currency clients flooding to his website.

Most of the customers and service providers in the sex industry are unbanked and not technically sophisticated. But after the Bay Area Chapter of the Sex Workers Outreach Project started advertising the bitcoin alternative, voluntarily produced tutorials sprung up that are helping novices navigate bitcoin payments on their cell phones.


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