Sex-Trafficking Site Backpage Might Have Sparked Crypto Capital’s Investigation
We, at BitcoinExchangeGuide, have been continuously bringing you the developments and fallout of the Bitfinex-Tether fiasco. A few days back we had reported about things getting worse for both these companies.
Now, Decrypt Media broke a story that reveals that the investigation in Crypto Capital was triggered by Backpage’s sex trafficking scandal.
Backpage.com Sex Trafficking Scandal
A former middle school teacher who admitted paying for sex with a 14-year-old girl who was trafficked on Backpage.com has been sentenced to 10 years in federal prison. Backpage.com was the dominant Internet marketplace for buying and selling sex in the United States before federal authorities seized it in April 2018 as part of an investigation into human trafficking and child prostitution.
Former CEO Carl Ferrer agreed to shut down the site as part of an agreement with prosecutors in which he pleaded guilty to conspiracy and money laundering charges and cooperated in the investigation. After Backpage was put out of business, U.S. demand for prostitutes dropped 67 percent and search volume plunged 90 percent. The website’s founders, Michael Lacey, and James Larkin have pleaded not guilty. They are scheduled to stand trial next year along with other defendants in the high-profile case.
Many crypto businesses were named in the indictment including Crypto Capital. The indictment read:
“Backpage also furthered its money laundering efforts 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 related companies .”
A total of $500,000 was found in multiple accounts of Crypto Capital linked to Backpage.
The Two Stories Converges
On the surface, it doesn’t seem like there is any link between Backpage’s operations and Bitfinex. However, reports have alleged that Crypto Capital may be one of the main ‘processors’ for Bitfinex. More specifically, a theory has developed that (allegedly) all of the shell accounts Bitfinex is using appear to belong to Crypto Capital.
These accounts may have been used by Bitfinex to evade the Wells Fargo blockade that the company was placed under in 2017. To some in the crypto community, it appears that when one of these shell accounts stops working, they cycle to another.
A lot of these stories are still speculative in nature and further investigation is required.