In a significant effort to combat the illicit trafficking of child sexual abuse material (CSAM), US Senators Elizabeth Warren and Bill Cassidy have addressed a letter to the US Department of Justice (DOJ) and Department of Homeland Security (DHS) expressing profound concerns about the alleged use of cryptocurrency to facilitate these criminal activities.

The letter underscores the senators’ distinct concerns over the “pseudonymity” attributed to cryptocurrencies, which they argue has facilitated the swift movement of payments for CSAM into the crypto world. Both lawmakers are deeply committed to ensuring that Congress and the Administration have the essential tools to thwart CSAM and hold those involved in its distribution responsible.

Their concerns are further reinforced by a recent report from blockchain analytics firm Chainalysis, which highlights cryptocurrency-based sales of CSAM as “a growing problem.” The report uncovers that virtual currency has emerged as the preferred mode of payment for buyers and sellers of commercial child sexual abuse content. Additionally, a Financial Trend Analysis by the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) indicates an increasing trend of offenders employing convertible virtual currencies to evade detection.

The senators have cited disturbing findings from FinCEN, revealing thousands of suspicious activity reports related to online child sexual exploitation and human trafficking offenses involving Bitcoin. These reports have allegedly identified over 1,800 unique Bitcoin wallet addresses associated with suspected offenses, with CSAM being specifically mentioned in 95% of the cases.

Highlighting the critical role played by Homeland Security investigators in the indictment of a South Korean national and numerous users in the United States for operating a dark web pornography site funded by Bitcoin, the senators have pointed out that the use of cryptocurrency in the illicit trade of CSAM appears to be on the rise.

The Chainalysis review further signifies that while the size of the crypto-based CSAM market has decreased, sellers have become more “sophisticated and resilient” to detection and takedowns. Bitcoin remains the most widely used cryptocurrency for purchasing CSAM, according to the report.

In an effort to address these burgeoning challenges, Senators Warren and Cassidy have sought clarification from the DOJ and DHS on a series of pertinent questions. These inquiries include the agencies’ current assessment of the alleged cryptocurrency’s role in facilitating CSAM, the sophistication of CSAM sellers, and the “unique challenges” posed by the use of crypto as payment in these crimes. They have also inquired about the agencies’ steps to combat CSAM sellers’ use of cryptocurrency, privacy coins, and obfuscation methods.

Senator Warren, in previous efforts, has shown her commitment by introducing the Digital Asset Anti-Money Laundering Act, a bipartisan bill aimed at countering illegal activities and misuse of digital currencies. The bill seeks to bring the digital asset ecosystem into “greater compliance” with anti-money laundering and counter-terrorism financing frameworks.

Disclaimer: The information provided in this research report is for informational purposes only and should not be interpreted as financial or investment advice. The NFT and cryptocurrency market is highly volatile, and readers should conduct thorough research before making any investment decisions.