Logan Campbell opened what he called "a high-class" agency in Auckland in 2009 to help raise the $250,000 he believed he needed to compete internationally to qualify for the London Olympics.
Prostitution is legal in New Zealand.
Campbell sold the agency a year later after the fundraising move was criticized by Taekwondo New Zealand and the national Olympic committee.
"At the time taekwondo wasn't getting any funding at all," Campbell said. "So it was pretty much to get good at the sport you had to get international competition and there wasn't any funding for us."
Campbell said that changed after the media got involved in the story.
Sponsors "started funding taekwondo and I didn't need the escort agency anymore," he said.
Campbell will compete in the under-60 kilogram class in London as one of three New Zealand taekwondo athletes. He finished in the top 16 in the under-58kg class at the 2008 Beijing Olympics.
Campbell said when he initially opened the escort agency he received a letter from the New Zealand Olympic Committee saying they did not believe it was an appropriate business to be connected with Taekwondo or the Olympic movement.
He said he was warned that his selection chances could be reduced if he continued to operate the business and he sold the agency in 2010.
"I think what happened was when they first found out about it, I think one person in the Olympic Committee got upset," he said. "I don't think it was the whole feelings of the Olympic committee."
Campbell said "a lot of things have transpired since then."
He received a $41,000 grant for New Zealand's central sports funding agency which enabled him to train full time and compete overseas. He became the top-ranked athlete in his weight division in Oceania.
"After I qualified there was no like, 'oh we're not going to send you because you had an escort agency,'" he said. "We sent our applications in, they approved us all and then they just called me up and said, 'Congratulations, you're going to the Olympics.'"