Crime and cryptocurrency: How local criminals use bitcoin illegally

Law enforcement is concerned that virtual currencies like bitcoin — already known to be used for illegal transactions, including sex and drug trafficking — will play an even bigger crime role as more investors use it as their preferred payment choice.

Digital or virtual currency, often referred to as cryptocurrency, is not regulated by any central authority or government. Although local entrepreneurs say cryptocurrency has many legitimate uses, the speed and relative secrecy of the transactions have also been known to attract criminals.

“Unsavory characters in our society” often utilize cryptocurrency, said Natalie Dunlevey, president of National Processing Solutions, a credit card processing and data security company in Dayton.

» RELATED: Bitcoin surges in popularity: Commons questions answered for you

Some criminals use bitcoin because users can open a wallet to send and receive bitcoin without giving a name or identity. There is no bank or central authority, like a government, to control this information. Bitcoin also became a popular method for making payments when a computer system is taken over by ransomware.

“It is utilized by some very unsavory people in our society and … there is no regulation,” Dunlevey said. “The fact that there is none is very worrisome.”

‘It’s definitely a misconception’

Bitcoin is not completely anonymous and transactions can be traced by police through bitcoin trading websites. Other untraceable cryptocurrencies, like Monero, are becoming popular for dark web uses including drug trafficking and human trafficking, said Jad Mubaslat, Wright State University graduate student and founder of, a bitcoin trading platform.

The record of all bitcoin exchanges and transactions are recorded on what is called the blockchain, which is a network of decentralized computers. Mubaslat said police do find ways to monitor transactions, and online bitcoin trading platforms regularly have open communication with law enforcement.

“It’s definitely a misconception that bitcoin is completely anonymous and I think there will be some dumb criminals who learn that,” he said.

» RELATED: Currency of the future? Some argue it’s bitcoin

Locally, there have been cases of bitcoin being used in crimes. Springboro teacher Amy Panzeca allegedly helped her 16-year-old son obtain bitcoin used to purchase LSD, and she is charged with child endangering and contributing to the unruliness of a minor.

The 16-year-old boy was sentenced earlier this month to 30 days in the Warren County Detention Center, ordered to complete an in-patient treatment program and placed on probation for drug charges. The mother currently on leave from her job in the school district.

A spokesman for the Federal Bureau of Investigation said he was not aware of any federal investigations in the southwest Ohio region that involved bitcoin or other cryptocurrency.

“It doesn’t mean that they don’t exist,” said Todd Lindgren, FBI spokesman.

Bitcoin used in sex trade

One of the big worries of law enforcement is the impact crytocurrency is already having on the sex industry. Tony Talbott, interim executive director of the University of Dayton Human Rights Center, said bitcoin is used to purchase online sex ads on websites like removed its adult content section from the classified website in early January, citing “unconstitutional government censorship. said the government pressured credit card companies to cease doing business with Backpage.

Talbott is not opposed to cryptocurrency, but he said it undeniably plays a role in prostitution and sex trafficking.

“With anything else, regular money is used for crimes,” he said. “People can’t say that cryptocurrency is inherently bad because it’s used for crime.”

» RELATED: US prosecutors move to cash in on $8.5M in seized bitcoin

Credit cards are no longer an option to use on for paid “dating” advertisements, so people who want to post ads have to pay in bitcoin. The paid advertisements brought in revenue for websites like backpage or other sites with adult interests sections.

“So if you’re a pimp or sex trafficker and you want to advertise on the adult services section, you have to pay,” Talbott said. “They would use a credit card, but they shut that down. For a short time, [the ads] became free. And then they came up with this new model and within a week or so, they had all these tutorials online on how you use bitcoin to pay for your ads.”

‘Adaptive’ law enforcement

Cuyahoga County Sheriff’s Sgt. Jim Mackey, an assistant task force director for the Ohio Human Trafficking Task Force, said women involved in prostitution or sex trafficking will pay someone cash to post the ads with bitcoin. He said a girl they recently “recovered” paid a man $200 to post sex ads for her. It’s another way women selling sex are victimized, he said.

» RELATED: Bitcoin futures slide after trading debut on CME

“We do see it. It’s usually not with Johns paying for girls,” he said. “It’s usually the girls or the traffickers that are using the bitcoin to spot ads on or other sites. There are a few associated with that.”

Currently, it’s not as mainstream yet in small sex trafficking busts and police are able to track transactions. Mackey thinks it could be even easier to track because there’s a transaction of currency transfer.

“Technology changes any industry, especially in policing where there’s going to be technological advances,” he said. “Law enforcement is very adaptive.”


This is the second of two parts. To read Sunday’s package, go to


• Currency of the future? Some think it's bitcoin

• New store to open this week at The Greene in Beavercreek

• Southwest Airlines adds new flight at local airport

• 7 things we learned about lead, local water infrastructure this year

• 7 new, cheap flight options added at regional airports in 2017

About the Author