Backpage CEO Pleads Guilty To Using Cryptocurrencies For Money Laundering

  • Backpage, a website described as an "online brothel" has recently been seized by authorities.
  • Its CEO recently revealed he used cryptocurrency exchanges to launder some of the money Backpage raked in.

The chief executive of listings website Backpage, Carl Ferrer, recently plead guilty to one count of conspiracy, and three counts of money-laundering, according to a recently revealed plea agreement. Ferrer reportedly used cryptocurrency exchanges to launder part of the website’s revenue.

According to reports, Ferrer was aware that a “great majority” of the website’s listings were for prostitution and attempted to conceal their true nature. Authorities dubbed the website an “online brothel” that raked in as much as $500 million. Ferrer laundered the money through “seemingly unconnected” bank accounts and cryptocurrency exchanges.

According to a 93-page federal indictment released three days ago, when Backpage was seized, the Department of Justice claims “virtually every dollar” Backpage earned represent “the proceeds of illegal activity.”

The DOJ added:

“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.”

DOJ

The 93-page document named as defendants the website’s co-founder Michael Lacey and Jim Larkin, along with five of their associates. Although Ferrer wasn’t mentioned in it, he’s now set to cooperate in the prosecution of Backpage’s co-founders.

Ferrer will also permanently shut down Backpage, and hand over the website’s data. In combined state-level deals, the company plead guilty to human trafficking, conspiracy, and money laundering in several US states.

Backpage had in the past been under scrutiny, as in 2015 payment processors Visa, American Express, and Mastercard stopped processing the website’s transactions citing “moral, social, and legal reasons.” At the time, Backpage turned to cryptocurrencies, which led to a movement called “The Backpage Effect” among sex workers.