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‘Backpage’ Used Bitcoin For Laundering: DOJ

The classified sex-advertising website Backpage.com used exchanges to launder millions of dollars in bitcoin. That’s what the U.S. Department of Justice alleged in a bombshell 93-page federal indictment which accused the online sex marketplace of money-laundering, conspiracy, and facilitating prostitution.

The Department of Justice shut down the website last week amid findings that it promoted underage prostitution and trafficking since its launch in 2004. Moreover, the site laundered tens of millions of dollars using cryptocurrency, the DOJ said. “[Illegal prostitution ads] have enabled Backpage to earn over $500 million in prostitution-related revenue since its inception,” the indictment read. “Virtually every dollar flowing into Backpage’s coffers represents the proceeds of illegal activity.” Coinbase Customer
The Justice Department continued: “Backpage also furthered its money-laundering through the use of bitcoin processing companies. Over time, Backpage utilized companies such as Coinbase, GoCoin, Paxful, Kraken and Crypto Capital to receive payments from customers and/or route money through the accounts of third parties.” Named as defendants were Backpage co-founders Michael Lacey and Jim Larkin and five of their associates. Backpage has a sprawling international operation that ran sex-marketing sites in 97 countries, according to a recent U.S. Senate report.
FBI shut down backpage
In 2015, payment processors Visa, American Express, and Mastercard stopped processing transactions on the site, citing “moral, social, and legal reasons.” That’s when bitcoin use became popular on the site. In fact, the use of bitcoin surged so much that it fueled a movement among sex workers called “The Backpage Effect.”
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