When Banks Turned Their Backs on Them, Some Adult Entertainment Workers Turned to Cryptocurrency

Alexandria LaRue became a sex worker in 2012, posting photos and videos on Backpage, a now-defunct classified advertising website that gained notoriety for its adult-themed content.

Almost immediately after LaRue — who uses the pronoun “they” — started doing this work, Bank of America closed their account and seized the more than $2,000 that was in it. Bank of America and other large banks are allowed to freeze deposits or entire accounts if they believe fraud or suspicious activity is occurring.

“It feels like nothing is a safe space or a safe place, especially when it comes to finances,” LaRue, who posted pornographic videos online, said. “Even though the work I do is 1,000 percent legal, it doesn’t mean they won’t shut down my account or they won’t take my money away.”

Backpage started processing payments in cryptocurrency soon after Visa and Mastercard cut off ties with the website in 2015 as allegations grew that it was complicit in sex trafficking. Finally in 2018, the Department of Justice seized the website and shut it down for “facilitating prostitution.”

The limits of traditional banking

A few days after the end of Backpage, Congress passed a series of bills into law aimed at curbing sex trafficking.

The laws, known as the Allow States and Victims To Fight Online Sex Trafficking Act (FOSTA) and the Stop Enabling Sex Traffickers Act (SESTA), attempted to shut down websites that facilitated sex trafficking online by increasing liability for third-party platforms — like Pornhub, RedTube and others — if they hosted content which played any role in facilitating sex trafficking or other illegal activities.

Sex workers and advocates for the industry warned that, while the laws were well-intentioned and addressed an important problem, the laws were too vaguely written and could harm sex workers and porn performers conducting their business legally.

Sure enough, in the years that followed, banks like JP Morgan Chase and Bank of America cracked down on sex workers using their financial services and shut down many accounts, for fear of being perceived to be complicit by federal regulators.

“Folks had their accounts closed by either banks or fintech companies that also frequently froze the money they had in those accounts, and they had difficulties getting that back,” said Spencer Watson, Executive Director of the Center for LGBTQ Economic Advancement and Research (CLEAR), a Bay-Area based advocacy group. “Some were completely unable to get that back or some had to wait weeks or more in order to have the check from the proceeds of their bank account delivered to them.”

In 2019, the Sex Workers Outreach Project’s (SWOP) Sacramento branch and non-profit Reframe Health + Justice conducted a national survey of more than 60 sex workers and their experiences with traditional banking systems. Almost half of the respondents said they had their accounts closed or denied by national banks and almost a third were told their account had been closed for a violation of the company’s terms and conditions of service.

“These companies have a strong profit motive and they’re also risk-averse,” Watson said. “And so the risk of dealing with individuals who work in sex work or in adult professions and businesses is a really strong deterrent for them to actually provide service.”

“This is the future, this is where stuff is going to go”

LaRue, also a Chapter Director for SWOP, felt like cryptocurrency was the only way to secure their financial future.

“I just integrated it into part of my life because I knew this is the future, this is where stuff is going to go,” they said. “There was information about it online, of course, and I spent a lot of time on Reddit trying to educate myself on what it is, how it works.”

Cryptocurrency-focused entrepreneurs saw an underserved market in the adult entertainment industry. Startups have popped up with snappy names like CumRocket, TitCoin and Model-X. Until federal regulators start to write laws that take into account cryptocurrency, these companies can operate outside the rules traditional banks must follow.

When banks like JP Morgan Chase and Bank of America do provide service to adult entertainment websites, they often charge high rates, because of a high frequency of “chargebacks,” when a customer disputes a charge on their account statement and claims the charge was made fraudulently.

Cryptocurrency, on the other hand, is immutable, so it can’t be disputed or taken back. Once a payment is made, it’s accounted for on the distributed ledger and is set in stone. Adult entertainment sites that accept cryptocurrency, instead of payment from traditional banks, don’t have to pay high fees from those cryptocurrency platforms and therefore don’t pass along the cost to the performers who post their content on their sites.

LaRue was one of the early adopters of SpankChain, a website on which adult entertainers can post explicit pictures and videos and get paid for their work in cryptocurrency. The company launched BOOTY ERC20, which has a lower volatility in value than a cryptocurrency coin like Bitcoin or Ether. It also recently launched Spank Pop Shots, where customers can buy one-of-a-kind digital, erotic pictures of models and performers called nonfungible tokens (NFTs).

But cryptocurrency still remains a mystery to many porn performers looking for alternative banking solutions.

Sage the Flame, a performer based in Atlanta, started out in adult entertainment by posting erotic pictures on Snapchat. She handled money through PayPal, but the company eventually flagged her account for suspicious activity.

“I guess my account got flagged just because of the small frequent payments that were happening on my account,” Sage said. “And they were just like, this is against our terms of service. You’re banned for life.”

The company held almost $2,000 in her account for six months. Sage had to ask family members for help to cover bills and rent payments. After getting her money back, Sage decided to turn to OnlyFans to post content. She found it easy to use and was pleased to see a specialized payment platform built into the website.

“It definitely made the whole process of keeping fans engaged, selling them content, interacting with them — it definitely made that process a lot easier and a lot more streamlined,” Sage said.

When the pandemic hit, Sage’s popularity on OnlyFans skyrocketed and she was able to make a steady income from her channel. But then in August, OnlyFans announced it would have to start banning sexually explicit content because of pressure from credit card companies and banks.

Sage started looking for other websites she could post her content to. The company reversed its decision six days later, but Sage and other performers no longer trusted the platform.

“It feels like the rug has been pulled up under us,” she said. “Why are we so disposable as a community? Why are we being discarded like this?”

Now Sage is working to diversify her platforms and post content to other sites. She asks customers to pay her on other financial platforms and keep the memo tab blank so her account doesn’t get flagged. But she’s not ready to switch to crypto.

“Unfortunately, cryptocurrency is not a convenient payment that everyone is accepting or everyone knows how to use,” she said.

“Crypto is a solution, not the solution”

Allie Knox, a fetish and porn performer, was one of the first performers to accept cryptocurrency payments exclusively and is one of the loudest voices in the sex work cryptocurrency space. She started shooting porn in 2014 and almost immediately got shut out from payment apps including PayPal, Square, Cash App and Stripe.

Left with no other choice, Knox started using cryptocurrency. She signed up with Coinbase, one of the largest crypto exchange platforms, and quickly became an expert in how to invest in the crypto market.

Knox believed in cryptocurrency’s promise to provide financial services to everyone, regardless of their profession, but that belief shattered when CoinBase blocked her account in 2016 for “suspicious activity.” CoinBase has since prohibited the use of accounts connected with adult content and services, even though the production and distribution of pornography is legal.

“Technology is never going to solve these social issues and that’s really what this is,” she said.

She helped launch SpankChain and now serves as an advisor to the company. But Knox says there are real challenges with using cryptocurrency and getting an entire industry to come on board. She says it’s difficult to use and not as accessible as it promises to be.

“I have lost a lot of money in addition to making a lot of money. Crypto is a solution, not the solution,” Knox said.