Bitcoin as a Trap for Trafficking

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Jun 23, 2023Reading Time: 3 minutes

Yes, Bitcoin is being used for illegal and dangerous purposes. But the cryptocurrency brings perpetrators less anonymity than they might think, as a team from the University of California, Berkeley proves.

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Many prostitutes do not offer their services willingly. In many cases, they are trafficked, sold and forced into prostitution. This illegal supply is increasingly shifting online to provide the johns with convenient and safe access to human commodities.

Step 1: The offer

There are a variety of websites offering sex. One of the largest in the world was for a long time the classifieds site Backpage.com. Previously, detectives had to manually read thousands of ads per day to find out where sex trafficking might be involved. This is time-consuming and, of course, very stressful for the psyche of those who uncover it. But what are the indications of sex trafficking? If the same author creates many ads with many different sex offers, there is a high probability that among them are involuntary sex services.

Step 2: Artificial intelligence

Rebecca Portnoff of the University of California, Berkeley and her team have developed an algorithm that does what is called machinelearning. The software is fed text patterns that may indicate sex slavery. Then the software finds matching offers. With each search, the algorithm refines itself.

“Our technology finds connections between ads,” Portnoff explains. “Is the pimp behind the ad on Backpage also the one on Craigslist? Is he the same man getting Bitcoin for enslaved sex workers? These questions can only be answered with advanced technology like our algorithm.”

The first part of Portnoff’s software is based on stylometry – which is the analysis of parts of text to tell if two texts are by the same author based on patterns of language use.

“There are hundreds of thousands of these ads placed every year,” adds Portnoff’s colleague Damon McCoy. “Any technique that brings to light similarities between ads and potentially illuminates the owners is a big boost for those working to curb exploitation.”

Step 3: Enter Bitcoin

Because Backpage was at the time the world’s most widely used sex services portal, Visa, Mastercard and the like refused to allow the operator to offer online payment via credit card. Therefore, the ads are most likely to be paid with Bitcoin.

Step 4: Anonymity my ass

The Bitcoin transactions are stored in the public blockchain. This allows Portnoff’s team to work out which Bitcoin addresses are placing many different ads. This is a strong indication that there is a larger organization behind it, increasing the likelihood of sex trafficking. But how is this possible? You can see in the blockchain that address A is sending bitcoin to address B, but you don’t know who A and B are.

Step 5: Sherlock Holmes for mathematicians

The way Portnoff pulls this off is worthy of the genius Sherlock Holmes. Normally, a Bitcoin transaction goes like this: Address A sends bitcoin to address B. Address B registers that and waits for the transaction to be validated by the entire network.

This takes between 10 minutes and several hours. Only then is the transaction complete. However, the webpage Backpage.com did not want to wait that long.

After all, customers fill out the profile, send Bitcoin and should get it online immediately. Backpage thus risks that the transaction will not be validated. They don’t care, so the transaction is completed immediately. In the blockchain, the transaction time is recorded to the millisecond and on Backpage.com’s public profile as well.

Portnoff now takes the Backpage timestamp and compares it to all bitcoin transactions in the blockchain. This is how she finds transactions that belong together. Then it groups bitcoin addresses and can find out if many ads are paid from one address.

This is an abbreviated representation. In Portnoff’s scientific paper, she spreads out the process over ten tightly written pages.

Step 6: Off to the FBI with it

The data collected by Rebecca Portnoff can now be primly linked. Were the Bitcoin addresses used to pay for other things, perhaps leading to phone numbers or email addresses? Are the Bitcoin purchased in exchanges with credit cards, and can that data be accessed by court order? Portnoff says NGOs and government agencies either already have a lot of interest in their program, or are even already using this.

Incidentally, Backpage.com’s CEO Carl Ferrer was arrested in October 2016 for facilitating forced prostitution. The charges were reduced to money laundering, but at least Ferrer pleaded guilty to that charge. The webpage has been taken off the internet by the FBI.