Knox describes herself as “one of the most outspoken sex workers, particularly for crypto.” Her interest kicked off in 2014, which is when she says several vendors, including PayPal, Square Cash, and Venmo, shut down her accounts because of red flags related to sex work.
So Knox started accepting cryptocurrencies instead. Her first exchange of bitcoin for content was pretty casual.
It started on a Skype call with a client. “I had a Coinbase account at the time, and he said, ‘Hold your QR code right to this camera here,’ and he sent it through the camera. And I got it,” she explained.
It took 15 minutes, and there were no chargebacks, no website commission fees, and no bank intermediaries to turn down the transaction – all major pluses in her industry. But the biggest attraction was having total and irreversible ownership over the money she had earned.
“The majority of sex work in the U.S. is legal. It’s not dealt with fairly, but it’s still legal,” explained Kristen DiAngelo, an activist and Sacramento-based sex worker who has spent over four decades in the industry. “Stripping is legal…massage is legal…escorting is legal. The only thing that’s really illegal in the U.S. is the honest exchange of sexual activity for remuneration, for money.”
Some escorts – who charge anywhere from $1,700 an hour to $11,000 for a full 24 hours – now explicitly say in their ads that they prefer to be paid in bitcoin or ethereum.
Allie Rae is a 37-year-old mother of three boys who says she went from making about $84,000 a year as an ICU nurse in Boston to $1.3 million, thanks to her work on OnlyFans, which has more than 130 million users.
DiAngelo tells CNBC she will never forget the first time her bank account was closed without warning.
It happened when she was on a trip to Washington, D.C. over a decade ago.
“I had just gone into the bank, made a deposit, and I went to buy lunch in Dupont Circle,” said DiAngelo. “I gave him my card, and it was declined. I gave him my card, and it was declined again. And I gave my card again, and it was declined again. And I was like, ‘No, no, no, no, that can’t be right. There’s something wrong.’”
DiAngelo called Citibank and learned that her account had been frozen and she should tear up her credit card. DiAngelo says the customer service rep told her that they weren’t “at liberty” to tell her why it had happened, and she would have to write a formal letter to request additional details.
They did, however, say that she was still responsible for any money owed.
So DiAngelo did what other sex workers do: She “platform hopped,” meaning that she brought her money to another bank. When they also flagged and closed her account, she moved on to the next. After being shut out of a third bank, DiAngelo says she turned exclusively to bitcoin for her online banking needs.
Nearly every sex worker interviewed for this story mentioned platform hopping. The government has a set of anti-trafficking guidelines drawn up by the Financial Crimes Enforcement Network, or FinCEN, and the banks and big payment apps keep an eye out for activity deemed suspicious by those guidelines. Those red flags include making cash deposits frequently – a hallmark of the sex work profession.
In 2014, for example, PayPal booted her because of a payment for her used socks that was large enough to get red-flagged. Knox says neither she nor the buyer were refunded. (PayPal tells CNBC that her account was “closed due to policy violations.”)
Later, in 2016, Coinbase closed her account and blocked her from making others. (Coinbase acknowledged to CNBC that its terms of service prohibit the use of its “commerce or retail services connected to adult content.”)
“We’re the ones being punished – not the traffickers, not those that are actually abusing workers,” said Alana Evans, who has been an adult performer since the late 90′s. Evans is currently president of the Adult Performance Artists Guild, or APAG, a federally recognized union within the adult industry that represents all workers from adult film set actors, to content creators.
“They’ve attacked our banking; our ability to operate like the rest of the world,” explained DiAngelo. “You don’t exist if you can’t use the banking system.”
One hazard of the trade are chargebacks, in which a transaction is reversed when a consumer claims they have been fraudulently charged for a good or service they did not receive. It is a tool designed to protect consumers, but many sex workers say it is a tool that is abused in their industry by clients who dispute a transaction for a product or service they have already received.
Take OnlyFans. There are some customers who will dispute a transaction once they’ve already received custom video clips, or photos. OnlyFans’ official policy on its website says the creator, not the company, foots the bill for a chargeback. (OnlyFans did not respond to requests for comment.)
Many models have taken to forums like Reddit to share their experiences, in which they say these alleged scammers will sometimes put in for a chargeback six months after receiving pictures or videos.
Transactions in cryptocurrencies are final, rendering chargebacks impossible.
UK-based escort agency VIP Passion started to accept bitcoin in 2013. Two years later, Backpage made a similar move into bitcoin, litecoin, and dogecoin after Visa and Mastercard refused to process payments for its “adult” section.
Visa said at the time that the company’s rules prohibited the network from “being used for illegal activity” and that Visa had a “long history of working with law enforcement to safeguard the integrity of the payment system.” Mastercard issued a similar statement, saying that the card company has rules prohibiting its cards from “being used for illegal or brand-damaging activities.”
Stabile warns there are still barriers to mass crypto adoption among sex workers.
For one, there’s a steep learning curve for both workers and customers. Sex workers have written and circulated guides online on how to use crypto, but a sizable knowledge gap remains.
It is also difficult to get some customers to spend their bitcoin on adult content.
“They generally use it as a store of value,” says Stabile. “It’s a speculative currency.”
Knox says often clients choose not to pay her in crypto.
“That’s the hurdle that we’re at right now. We can take it all day long, but until people start using it and start paying us with it, it’s not going to really take off for adoption,” said Knox.
Sex workers who do accept crypto also have to contend with volatile prices, which can cut into their earnings. For instance, bitcoin is down more than 40% from its November all-time high.
DiAngelo says that in the early days of crypto, she would use bitcoin ATMs at liquor stores and gas stations to deposit cash to buy bitcoin. These machines charge commissions above and beyond the cost of the transaction.
Another major problem relates to the rules that govern cryptocurrency exchanges. Many platforms like Coinbase require know-your-customer, or KYC compliance. In practice, that means having to connect an ID and bank account to the platform – a non-starter for many working in the industry.
Because of this, some workers later find they can’t cash out the crypto they have earned for products or services rendered.
“For people like me making millions of dollars, a thirty day notice from OnlyFans would be the end of us. Crypto really feels like it’s kinda it, otherwise we’re going to be controlled forever and who knows the kind of content they’re going to continue to ban. They can turn you off tomorrow.”