Last updated:
April 26, 2024 10:59 EDT | 2 min read
In the United States, Senators Elizabeth Warren and Bill Cassidy are spearheading a joint effort to combat the utilization of cryptocurrencies in the trafficking of child sexual abuse material (CSAM).
They are collaborating with federal agencies to assess their technological capabilities in combating crypto transactions associated with the distribution of child abuse-related content.
Senators’ Appeal to DOJ and DHS to Tackle Cryptocurrency Use in Child Sexual Abuse Material Transactions
Senators Elizabeth Warren and Bill Cassidy are urging the Department of Justice and the Department of Homeland Security to intensify their efforts against the use of cryptocurrency in transactions related to the dissemination of child sexual abuse material (CSAM) online. They have raised concerns about a perceived surge in this illicit activity.
In an official communication to Attorney General Merrick Garland and Secretary of Homeland Security Alejandro Mayorkas, the senators have expressed worries about the anonymity provided by cryptocurrency transactions, enabling individuals involved in CSAM trading to evade law enforcement.
Citing information from the US Treasury’s Financial Crimes Enforcement Network, Chainalysis, and the Internet Watch Foundation, the letter highlights a noticeable increase in the use of cryptocurrency in illicit CSAM transactions.
Financial institutions have identified 1,800 Bitcoin wallets suspected of engaging in such transactions between 2020 and 2022. However, Chainalysis has reported a decline in the scale of the crypto-based CSAM market in 2023.
The use of instant exchangers enabling Monero conversion by CSAM vendors has significantly risen in recent years. Source: Chainalysis
The senators have pointed out the strategies employed by individuals participating in CSAM trading to conceal their activities, including the use of crypto mixing services and ATMs to obscure the origin of funds.
As per a Chainalysis study, sellers of such materials are utilizing “mixers” and “privacy coins” like Monero to cleanse profits and evade law enforcement detection. Additionally, instant exchangers facilitating Monero conversions have witnessed a substantial increase in activity recently.
Warren and Cassidy have stressed the seriousness of the situation, highlighting that cryptocurrency is the preferred payment method for perpetrators of child sexual abuse and exploitation.
To prompt action, the senators have requested the DOJ and DHS to share their research findings on the extent of cryptocurrency’s involvement in the CSAM problem. They have set a deadline of May 10 for the agencies to provide feedback.
Warren’s Stance on Cryptocurrency Regulation and the Recent DOJ Prosecution of KuCoin
Warren’s vocal criticisms of cryptocurrency, particularly its alleged connection to illicit activities, have faced opposition from some factions of the crypto community.
Despite pushback from crypto advocacy groups regarding her proposed anti-money-laundering legislation in July 2023, Warren has reiterated the necessity of stringent regulations to prevent the criminal misuse of cryptocurrencies, especially in cases related to CSAM.
The Department of Justice’s current technological capabilities in monitoring crypto transactions have yielded results, as evidenced by the indictment of cryptocurrency exchange KuCoin and two of its founders.
On March 26, the DOJ filed charges against KuCoin and its founders for operating an unlicensed money-transmitting business and violating the Bank Secrecy Act. The indictment alleges that KuCoin facilitated the laundering of over $5 billion in suspicious and criminal proceeds.
The DOJ emphasized that KuCoin’s failure to implement basic anti-money laundering measures allowed it to operate covertly in financial markets and act as a haven for illicit money laundering operations.