Child Abusers Are Getting Better at Using Crypto to Cover Their Tracks

Child Abusers Are Getting Better at Using Crypto to Cover Their Tracks

  15 Jan 2024

For those who trade in child sexual exploitation images and videos in the darkest recesses of the internet, cryptocurrency has been both a powerful tool and a treacherous one. Bitcoin, for instance, has allowed denizens of that criminal underground to buy and sell their wares with no involvement from a bank or payment processor that might reveal their activities to law enforcement. But the public and surprisingly traceable transactions recorded in Bitcoin’s blockchain have sometimes led financial investigators directly to pedophiles’ doorsteps.

Now, after years of evolution in that grim cat-and-mouse game, new evidence suggests that online vendors of what was once commonly called “child porn” are learning to use cryptocurrency with significantly more skill and stealth—and that it’s helping them survive longer in the internet’s most abusive industry.

Today, as part of an annual crime report, cryptocurrency tracing firm Chainalysis revealed new research that analyzed blockchains to measure the changing scale and sophistication of the cryptocurrency-based sale of child sexual abuse materials, or CSAM, over the past four years. Total revenue from CSAM sold for cryptocurrency has actually gone down since 2021, Chainalysis found, along with the number of new CSAM sellers accepting crypto. But the sophistication of crypto-based CSAM sales has been increasing. More and more, Chainalysis discovered, sellers of CSAM are using privacy tools like “mixers” and “privacy coins” that obfuscate their money trails across blockchains.

Perhaps because of that increased savvy, the company found that CSAM vendors active in 2023 persisted online—and evaded law enforcement—for a longer time than in any previous year, and about 57 percent longer than even in 2022. “Growing sophistication makes identification harder. It makes tracing harder, it makes prosecution harder, and it makes rescuing victims harder,” says Eric Jardine, the researcher who led the Chainalysis study. “So that sophistication dimension is probably the worst one you could see increasing over time.”

Better Stealth, Longer Criminal Lifespans

Scouring blockchains, Chainalysis researchers analyzed around 400 cryptocurrency wallets of CSAM sellers and more than 10,000 buyers who sent funds to them over the past four years. Their most disturbing finding in that broad economic study was that crypto-based CSAM sellers seem to have a longer lifespan online than ever, suggesting a kind of relative impunity. On average, CSAM vendors who were active in 2023 remained online for 884 days, compared with 560 days for those active in 2022 and just 112 days in 2020.

To explain that new longevity for some of the most harmful actors on the internet, Chainalysis points to how CSAM vendors are increasingly laundering their proceeds with cryptocurrency mixers—services that blend users’ funds to make tracing more difficult—such as ChipMixer and Sinbad. (US and German law enforcement shut down ChipMixer in March 2023, but Sinbad remains online despite facing US sanctions for money laundering.) In 2023, Chainalysis found that about 46 percent of CSAM vendors used mixers, up from around 22 percent in 2020.

Chainalysis also found that CSAM vendors are increasingly using “instant exchanger” services that often collect little or no identifying information on traders and allow them to swap bitcoin for cryptocurrencies like Monero and Zcash—”privacy coins” designed to obfuscate or encrypt their blockchains to make tracing their cash-outs of profits far more difficult. Chainalysis’ Jardine says that Monero in particular seems to be gaining popularity among CSAM purveyors. In the company’s investigations, Chainalysis has seen it used repeatedly by CSAM sellers laundering funds through instant exchangers, and in multiple cases it has also seen CSAM forums post Monero addresses to solicit donations. While the instant exchangers did offer other cryptocurrencies, including the privacy coin Zcash, Chainalysis’ report states that “we believe Monero to be the currency of choice for laundering via instant exchangers.”

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