Pedophiles Turn to Bitcoin

Wednesday, 30 Jul 2014 08:24 AM

By Elliot Jager

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Anonymous wire transfers and virtual Bitcoin currency are replacing Western Union, PayPal, and credit cards as the preferred payment methods used by pedophiles,  Bloomberg News reported.

Banks are working with law enforcement in tracking how pedophiles pay for Internet content using traditional payment methods. In 2006, billions of dollars in child pornography was sold on the open Internet. That figure has dropped to "almost zero," according to Bloomberg.

"After we take Web pages down, they'll pop back up online again somewhere else," said Sarah Smith, at Britain's Internet Watch Foundation. Using tips from the public, the organization works with Web services providers, as well as Google Inc. and Microsoft Corp., to remove child porn from the Internet.

Some child porn sites have as many as 250,000 members willing to pay $29.95 a month, Bloomberg reported.

Producers and consumers of child porn are turning away from the open Internet to The Onion Router— or Tor— and using Bitcoins as legal tender. Using as many as 5,000 relays, Tor was created by the U.S. Naval Research Laboratory to allow users living under authoritarian regimes to maintain their anonymity. It has been exploited by those buying and selling child pornography or engaged in other criminal enterprises.

Child porn paid for by Bitcoins, prepaid charge cards, and by nameless wire-transfer are harder to trace. Several wire-transfer service companies now insist on U.S. bank accounts or credit cards issued by US banks before processing online remittances.

The Digital Economy Task Force, which brings the finance industry and government together, has recommended anti-money laundering rules be applied to virtual currencies. It also called for restricting the anonymity of Tor users.

"Paying for something makes you feel like a legitimate member of society," said Gan Thayanithy, a British detective. "When it's harder to get that gratification, and if guilt from a banking transaction is involved, it would put a stop to lower-level offenders," Bloomberg reported.

Meanwhile, Bitcoin is also being used as a payment method to extortionist preying on users of the Tor network, International Business Times reported. The criminals contaminate users' computers with malware threatening to destroy their data unless the victims transfer money to the hackers.

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