Senator Elizabeth’s Letter Alleges Crypto a ‘Payment of Choice’ for Child Exploitation

US top lawmaker Elizabeth Warren urged the Department of Justice (DoJ) and Homeland Security to crack down on crypto usage in child exploitation. The Massachusetts senator fired another salvo against cryptocurrency by linking the assets as payment choices for the child sexual abuse material (CSAM). 

Crypto Facilitating Payments to Child Exploiters

Senator Warren penned the bipartisan open letter to the law enforcement agencies, which Louisiana Senator Bill Cassidy cosigned. The senators expressed concerns over the continued crypto usage in facilitating illegal child exploitation material. The two Senators urge the Homeland Security and Justice departments to end the illicit trade. 

Warren and Cassidy singled out crypto and the anonymity it grants as attracting criminal actors engaging in images and videos that capture the sexual exploitation of children. The senators cited the 2021 publication by the International Centre for Missing and Exploited Children. 

The senators referred to the publication by the Financial Crimes Enforcement Network (FinCEN) that in February labeled Bitcoin the preferred convertible virtual currency (CVC) by human traffickers and child abusers. The FinCEN reported mass usage of Bitcoin in the illicit trade between 2020 and 2021.

The senators observed that 2,157 reports identified Bitcoin as the main CVC utilized in child sexual exploitation and human trafficking. Only 144 reports did not attribute Bitcoin with the illicit trade, though they also failed to specify the currency used. 

The dataset shows that FinCEN spotted 1,800 unique wallet addresses utilized by the perpetrators of child sexual abuse and human trafficking. Besides the FinCEN report, the legislators cited the Crypto Crime Report by blockchain intelligence firm Chainalysis, which revealed that the CSAM vendors widely adopted privacy coins such as Monero.

Warren Letter Urges Congressional and White House Input 

Chainalysis illustrates that while Bitcoin is widely utilized for CSAM purchasing, the vendors adopt Monero. The data illustrates that Monero is today’s most prevalent in use among the CSAM vendors involved in laundering the on-chain earnings and not obscure the purchases directly. 

The Chainalysis report admits the difficulty of verifying the role that Monera directly plays on-chain when it deploys the standard blockchain analysis approaches. Nonetheless, the CSAM vendors often leverage the Monero-friendly exchanges as their proxy to execute transactions instantly.  

Senators Warren and Cassidy gave the DoJ and Homeland Security departments until May 10 to respond. The letter indicates it would see Congress and the Biden Administration to help address the challenges posed by CSAM and crypto. 

The letter faults the inadequacy of the present anti-money laundering (AML) rules. Also, law enforcement methods prove ineffective in detecting and mitigating crimes. 

The senators reiterated their commitment to ensure Congress and the White House formulate the full suite of tools necessary to end CSAM. The senators seek punishment for the parties selling the material. 

The pressing need identified in the letter is assessing the role crypto plays in facilitating CSAM. They seek a determination on whether crypto use poses unique challenges hindering the identification and prosecution of CSAM crimes. The senators asked the Justice Department about the steps deployed to address the challenges. 

Warren Criticism Against Crypto, Urges Stricter Action

Warren embraces the criticism of crypto, particularly in leading the ongoing crusade to crack down on illicit usage. The Massachusetts senator tabled the Digital Asset Anti-Money Laundering Act two years ago. The Democrat targets an expanded regulatory framework applied in traditional financial institutions (TradFi) and decentralized finance (DeFi) ecosystems. 

The expanded framework targets clarity for wallet providers, mining firms, and network validators. It aims to ensure compliance with the AML and know your customer (KYC) requirements. 

Besides the letter, Senator Warren had in the past summer pointed out the crypto utilization to facilitate fentanyl trade. She urged for stricter regulations against perpetrators. 

Senator Warren has, in her legislative efforts, supported the US Securities and Exchange Commission’s (SEC) enforcement actions targeting crypto. She faulted the Gary Gensler-chaired SEC for approving the Bitcoin spot exchange-traded funds (ETFs). 

Warren warned that if the securities watchdog agency allows crypto to burrow into the financial system, it yields urgency to ensure compliance with the basic AML rules. 

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