The Issue of Crypto Assets in Child Sexual Exploitation

Recently, a case involving underage pornography has drawn widespread public attention. According to reports, someone is operating a forum selling a large number of secretly filmed videos of minors, and supports members to pay for purchases using Crypto Assets. This incident once again exposes the issue of the abuse of Crypto Assets in illegal activities.

By analyzing the relevant collection addresses, it was found that in the past three years, the funds flow of the involved wallet reached as high as 3.582 million USDT. The criminal gang evades investigation by constantly changing collection addresses and creating new posts, but there is still a continuous flow of anonymous customers and a large number of transactions.

Further tracking revealed that five addresses received amounts exceeding 20,000 USDT from the wallet involved in the case, with a maximum of 67,700 USDT. These addresses may be the actual beneficiaries and are associated with several centralized exchanges. This suggests that some exchanges may have been exploited by criminals.

Crypto Assets are increasingly being used in the trading of Child Sexual Abuse Material (CSAM). Compared to traditional payment methods, Crypto Assets provide a certain level of anonymity for CSAM transactions, making it more difficult to track. Criminals can use encryption mixers and ATMs to hide payments, and can also convert their profits to fiat currency through peer-to-peer exchanges.

According to data from the UK IWF organization, the number of CSAM websites that offer Crypto Assets payments nearly doubles each year. Among the 250,000 CSAM websites discovered in 2021, 1,014 supported virtual currency transactions. A report from the US FinCEN also shows that between 2020 and 2021, thousands of suspicious activity reports involving Bitcoin were related to CSAM, involving more than 1,800 unique Bitcoin wallet addresses.

These data reflect the prevalence of Crypto Assets in CSAM crimes and highlight the challenges faced by regulatory agencies. To address this issue, industry organizations should strengthen financial risk control, fulfill customer transaction monitoring responsibilities, cooperate with law enforcement agencies, and integrate threat intelligence services. Individuals should also actively report suspicious activities.

Crypto Assets, as a financial innovation, have created opportunities for illegal activities while bringing convenience. The industry needs to work together to leverage professional knowledge and technical means to identify risky activities and maintain the healthy development of the crypto ecosystem.