Foreign Policy

Intercourse criminals use Bitcoin. The police too.

Chris Janczewski finished a lengthy investigation into online drug trafficking in Thailand when a source called him about a website in South Korea. The website, hosted on the darknet, encouraged users – including US citizens – to pay Bitcoin to access over a million videos depicting the rape and sexual assault of children as young as six months of age.

Janczewski, a special agent in the Internal Revenue Service’s Criminal Investigations division, was used to tracking cryptocurrency transactions to track money laundering and other forms of organized crime. But he had never worked on a child sexual abuse case. “I thought the FBI or Homeland Security or someone was doing something about it,” he recalls. “Why does the IRS have to do something? And then I looked around and found: Nobody did it. “

For the next two years, through late 2019, Janczewski spearheaded the investigation and shutdown of what the US Department of Justice has called “the world’s largest darknet child pornography website”.

Cryptocurrencies are increasingly being used to fund the sexual exploitation of children (CSE), which opens up new opportunities for law enforcement agencies to track down perpetrators. However, experts say success stories are rare: unlike those responsible for large money crimes like drug trafficking and money laundering, the agents hired to investigate CSE lack the training, knowledge, and resources to handle the growing number of operations track funded by Bitcoin and other cryptocurrencies. With law enforcement behind the curve, hundreds of thousands of sexual predators are left untested and can continue to harass children.

Contrary to popular belief, some of the most popular cryptocurrencies like Bitcoin, Ethereum or Litecoin can be easily tracked. Every transaction is logged in a shared public ledger called the blockchain. Criminals can use various techniques to disguise their expenses, but the records – though harder to find – remain. “I’ll pay you $ 2,000 in a dark alley. Who are the witnesses to this transaction? Just you and me right “said Pamela Clegg, director of financial research and education at blockchain analytics firm CipherTrace.” With cryptocurrency … the whole world could be the witness. “

However, a lack of understanding of what cryptocurrency is and what its use is in child exploitation often leads to anti-human trafficking investigators rejecting cases or overlooking vital evidence in the US and worldwide. Clegg cites an example from 2017 when a team of seasoned law enforcement officers from Central America uncovered a website containing child sexual abuse materials (CSAM) with Bitcoin addresses that could have identified dozens of users. The team didn’t know how to collect the data before the website shut down and mistakenly lost all of the information.

“I don’t want to paint this because law enforcement has no experience with crypto,” explains Clegg. “Law enforcement does an amazing job with crypto. It is primarily the teams that focus on human trafficking and CSAM that I am referring to. “In 2019, she spoke to 750 law enforcement officers from nearly 100 countries, each specializing in investigating human trafficking and sexual exploitation of children. “I asked, ‘How many people actually worked on a case involving cryptocurrency?'” To Clegg’s dismay, only five people raised their hands.

Governments around the world are failing to prioritize cryptocurrency analysis in investigations into the sexual exploitation of children, agrees Neil Walsh, chief of cybercrime, anti-money laundering, and terrorist financing at the United Nations Office on Drugs and Crime (UNODC). “It seems to me that this is still seen as a niche area: that it’s a little bit geeky and not something that is common.”

Meanwhile, the rate at which sex predators are spending virtual money far exceeds the ability of anti-human trafficking agents to track them down. According to Chainalysis, a US-based blockchain analytics company, the amount of money paid in Bitcoin and Ethereum to well-known child abuse websites nearly quadrupled, exceeding $ 1.75 million, between 2017 and 2019.

Some cryptocurrency pioneers are exacerbating the problem by improving privacy and data protection to make transactions completely anonymous. Of the roughly 4,000 cryptocurrencies currently listed on the CoinMarketCap price tracking website, private analysts and senior IRS investigators say that only a handful – like Bitcoin and Ethereum – are easy to track. Even then, it requires the right training and tools.

“We’re in an arms race here,” said Rebecca Portnoff, director of data science at THORN, a US organization working to develop technology to combat child sexual abuse. “And it’s a pretty complicated arms race.”

Training is not a priority in these cases, according to Clegg, as buying and selling online child sexual abuse materials is a fraction of what changes hands in employee or drug crimes – most payments are between US 10 and 50 US -Dollar.

To turn off Welcome To Video, the South Korean child exploitation website, Janczewski and a skeletal team of agents from the IRS and Homeland Security Investigations teamed up with the Korean National Police. Together they spent two years tracking down thousands of Bitcoin addresses, which resulted in the arrest of 340 men in 38 countries, including the United States, the United Kingdom and Saudi Arabia. At least 25 children were rescued from abuse situations.

Janczewski believes other federal agencies overlooked Welcome to Video because they did not have the expertise or the necessary manpower. “Child exploitation investigators have been very good, but they rarely had to deal with cryptocurrencies, and that’s a big learning curve,” he said. “And they’re just too busy.” Occasionally, when he shared a lead with other agencies, weeks later he would often check to see if they had made any progress. “In one example, the agent said, ‘Yes, I’d really like to work on this case, but it takes a lot of effort to figure out what’s going on.'”

The case was no less time consuming for officials in Korea. Jong-sang Choi had served as the head of the Korean National Police’s cyber investigation department since 2018, overseeing dozens of agents charged with investigating Welcome to Video. The site was suitable for up to a million users, and tracking their crypto transactions was a challenge – “a battle between a spear and a shield,” Jong-sang recalled.

Despite the efforts of Jong-sang and Janczewski, the majority of Welcome to Video users likely got away with their crimes. In several cases, investigators tracked Bitcoin addresses abroad only to get the relevant authorities to ignore their reports. “Not only are they not interested,” said Jong-sang, “but they are also incapable.”

“The point is to make this engineering challenge a major part of investigation technology,” said Walsh of the UNODC. “And that requires political leadership at home and abroad.”

CSAM consumers are everywhere, but the demand is mostly driven by people in rich countries. A study from the Philippines found that three quarters of the people who bought child sexual abuse materials were from the United States, Sweden, and Australia. According to the Global Partnership to End Violence Against Children, 81 percent of child sexual abuse material is produced in low-income regions, including Southeast Asia, Africa and Latin America. In many of these countries, the tools needed to analyze virtual transactions are prohibitively expensive. “If you are in the UK or the US, the opportunity to invest in a blockchain analyzer is very possible,” said Walsh. “However, if you are from an economically developing country, this is really difficult.”

Rather than relying on resource-intensive agencies and governments in low-income countries to independently investigate CSE crimes using cryptocurrency, some experts have urged financial institutions – like the “exchanges” that can convert cryptocurrency into other assets, including traditional state ones – . Money Spent – Establish logs to identify and report suspicious activity to authorities.

In May 2020, Aaron Kahler, founder of the Anti-Human Trafficking Intelligence Initiative, founded the Cryptocurrency Consortium to Combat Human Trafficking after discovering a “big mistake” in US law enforcement and financial institutions investigating child sexual abuse. “It’s still not a priority,” he said, explaining that the nonprofit consortium is working to encourage collaborative exchanges with law enforcement agencies and provide much-needed tools and expertise to US investigators.

Since the Welcome to Video shutdown, Janczewski has worked with European investigators to track down over 300 Bitcoin addresses linked to a website hosted in the Netherlands called Dark Scandals, which sold more than 2000 videos of women and children who were raped. In March last year, the authorities arrested the website administrator.

Janczewski admits he initially failed to understand how productive the use of cryptocurrency was in child sexual abuse or what role the IRS could play in combating it. But he’s doing it now.

“When I got around to that, I realized this was the right thing to do.”

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