Last updated:
April 26, 2024 10:59 EDT
| 2 min read
Currently underway in the United States is a coordinated effort to crack down on the use of cryptocurrencies in the exchange of child sexual abuse material (CSAM), spearheaded by Senators Elizabeth Warren and Bill Cassidy.
The senators are engaging with federal agencies to assess their technological capabilities in combating crypto transactions associated with the dissemination of materials related to child abuse.
Senators Urge DOJ and DHS to Tackle Cryptocurrency Use in Child Sexual Abuse Material Transactions
US Senators Elizabeth Warren and Bill Cassidy are urging the Department of Justice and the Department of Homeland Security to intensify their efforts in combating the utilization of cryptocurrency for transactions linked to the distribution of child sexual abuse material (CSAM) online, citing a perceived escalation in the problem.
In a letter addressed to Attorney General Merrick Garland and Secretary of Homeland Security Alejandro Mayorkas, the senators expressed concerns 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 Crime Enforcement Network, Chainalysis, and the Internet Watch Foundation, the letter highlights a significant increase in the use of cryptocurrency in illicit CSAM transactions.
Notably, financial institutions flagged 1,800 Bitcoin wallets suspected of engaging in such transactions between 2020 and 2022. However, Chainalysis noted a decrease in the scale of the crypto-based CSAM market in 2023.
The rise in the use of instant exchangers by CSAM vendors for Monero conversion has been particularly notable in recent years. Source: Chainalysis
The senators emphasized the strategies employed by individuals participating in CSAM trading to conceal their activities, such as utilizing crypto mixing services and ATMs to obscure the origin of funds.
A study by Chainalysis revealed that sellers of such materials are leveraging “mixers” and “privacy coins” like Monero to cleanse profits and avoid detection by law enforcement. Additionally, there has been a substantial increase in activity on instant exchangers facilitating Monero conversions in recent years.
Warren and Cassidy underscored the seriousness of the issue, pointing out cryptocurrency’s widespread adoption as the preferred payment method for perpetrators of child sexual abuse and exploitation.
In a bid to prompt action, the senators called on the DOJ and DHS to disclose 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 reply.
Warren’s Stance on Cryptocurrency Regulation and Recent DOJ Prosecution of KuCoin
Warren’s vocal criticisms of cryptocurrency, particularly regarding its potential ties to illicit activities, have garnered pushback from certain segments of the crypto community.
Despite facing opposition from crypto advocacy groups, who argued that her proposed anti-money-laundering legislation in July 2023 could have negative repercussions on US startups and investors, Warren has reaffirmed her belief in the importance of stringent regulations to prevent criminal exploitation of cryptocurrencies, including in cases related to CSAM.
The DOJ’s current technical capabilities in monitoring crypto transactions have yielded results, as evidenced by the prosecution of cryptocurrency exchange KuCoin and two of its founders.
On March 26, the DOJ charged KuCoin and its founders with 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 funds.
The DOJ emphasized that KuCoin’s failure to implement basic anti-money laundering measures enabled it to operate covertly in financial markets and serve as a haven for illicit money laundering activities.