The Abuse of Crypto Assets in Illegal Domains: A Case Study on Child Sexual Exploitation

Recently, the incident involving Taiwanese artists being exposed for holding underage pornographic images has attracted widespread attention. This incident reveals a disturbing fact: Crypto Assets are increasingly being used for illegal activities, especially in the pornography industry. This article will delve into this phenomenon and explore the on-chain risks behind it.

Case Study: Fund Flow in a Certain Forum

By analyzing the public information from a certain forum, we discovered multiple collection addresses used for illegal image trading. The funds flowing through these addresses have reached as high as 3.582 million USDT in the past three years. By tracking transactions of specific amounts, we found that these addresses have received thousands of remittances.

Criminal gangs frequently change their payment addresses and create new posts in an attempt to evade investigation. However, the continuous flow of anonymous customers and a large volume of transactions still exist.

Through further analysis, we identified 5 suspected major profit addresses, with the highest amount received reaching 67,700 USDT. These addresses are associated with multiple centralized exchanges, indicating that these platforms may have been exploited by criminals.

The Application Trends of Crypto Assets in Child Exploitation Materials

Although many countries have begun to formulate relevant regulations, the application of Crypto Assets in illegal areas remains widespread. Compared to traditional payment methods, Crypto Assets provide higher anonymity for illegal transactions, making tracking difficult.

Crypto Assets not only reduce the risk for buyers but also provide illegal providers with convenient ways to launder money and cash out. According to data from a certain non-profit organization, the number of child abuse websites that offer Crypto Assets payment nearly doubled each year. In 2021, among 250,000 websites containing related content, over 1,000 supported virtual currency transactions.

The report from the Financial Crimes Enforcement Network of the United States further shows that between 2020 and 2021, financial institutions submitted thousands of suspicious activity reports involving Bitcoin, of which 95% were related to child sexual exploitation materials, involving more than 1,800 unique Bitcoin wallet addresses.

Conclusion

Crypto Assets, as a financial innovation, provide convenience while also creating opportunities for illegal activities. Industry participants should actively utilize professional knowledge and technical tools to identify risky activities, strengthen fund risk control, fulfill regulatory responsibilities, and cooperate with law enforcement agencies. At the same time, individuals should also remain vigilant and actively report suspicious activities.

Only with the joint efforts of all parties can we effectively curb the abuse of Crypto Assets in illegal areas and maintain a healthy financial environment.