Bitcoin (BTC) became a popular means of conducting illegal transactions several years ago to support a booming global human smuggling and exploitation business, according to an analysis released Tuesday by the U.S. Treasury Department.
Based on government filings from financial firms in 2020 and 2021, that period saw an uptick in the use of cryptocurrencies – most commonly Bitcoin – in crimes that included human trafficking and child sexual exploitation, according to the report released by the Treasury Department's Department of Finance Crimes Enforcement Network (FinCEN) trend report. During these two years, the analysis found that 2,311 cryptocurrencies worth more than $412 million were used in such crimes.
“Victims of these crimes are forced into forced labor, slavery, involuntary servitude, servitude and/or coerced into commercial sexual acts,” the report said. And crypto usage increased sharply: 1,975 reports in 2021 surpassed the 336 in 2020.
“Human traffickers and perpetrators of related crimes despicably exploit adults and children for financial gain,” FinCEN Director Andrea Gacki said in a statement. When financial companies report these cases, “it helps law enforcement protect and save innocent lives.”
But the most recent data examined comes from December 2021 – more than two years ago. This period preceded the crypto winter and subsequent recovery in recent months.
A majority of the cases assessed in this report involved the exchange of crypto for “child sexual abuse material” – typically “CSAM” being explicit photos and videos of children – generally via darknet marketplaces using cryptocurrencies. Kiosks (commonly known as FinCEN noted Bitcoin ATMs) or transactions occur through mixers.
The use of crypto and common transaction methods have undergone some changes since that time, and crypto data firm Chainalysis found that “the scale and severity of CSAM activity peaked in 2021,” according to a review published last month.
FinCEN's report suggested that some of the increase over the two-year period may have been driven by “increased awareness and vigilance” by financial institutions aware of the criminal use of cryptocurrencies.
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