binary-options-fraud-arrest DOJ arrests 337 users of global child porn site with BTC investigative tools

Crypto investigative tools have helped to nab 337 users of the world’s largest operating child pornography website on the Darknet that had collected million of dollars worth of Bitcoin over the past few years from its users. Its founder, 23-year old Jong Woo Son, a South Korean citizen, was indicted by a U.S. grand jury, but he is already in jail in South Korea, serving a sentence after being convicted on his home turf. Those arrested hail from 22 U.S. states and 11 countries across the globe.

The widespread operation to shut down this site and its users has lasted more than a year. Coindesk reported that:

On March 5, 2018, agents from the U.K., and Korean National Police in South Korea arrested Son and seized the server that he used to operate a Darknet market that exclusively advertised child sexual exploitation videos available for download by members of the site. The operation resulted in the seizure of approximately eight terabytes of child sexual exploitation videos, which is one of the largest seizures of its kind.

The breadth of the illicit activity was mind-boggling. Investigators seized over “250,000 unique videos, and 45 percent of the videos currently analyzed contain new images that have not been previously known to exist”. In the U.S. alone, law enforcement officials searched private residences and related businesses of 92 suspected individuals. The investigative team also rescued 23 minors that had been exploited by the child porn perpetrators. These victims were discovered in the U.S., Spain, and the U.K.

The site was the first known incidence of a criminal group dealing in child porn on a global scale that chose to collect its funds via Bitcoin. The criminals had actually reserved one million bitcoin addresses. A single account was assigned to each user. Investigators tracked down 24 individuals in five countries, who were actually funding the Darknet “Welcome to Video” (WTV) website and its subsequent exploitation of children. Recovered funds will eventually go to the victims of the crime.

Chainalysis, a crypto data analytics firm and provider of tools for “blockchain forensics”, worked with authorities to track down and identify users on the Bitcoin blockchain. Its primary tool is called “Chainalysis Reactor”. IRS and Homeland Security investigators, with the aid of this tool, were able to analyze Bitcoin transactions, and when combined with KYC information from crypto exchanges, they were able to nab the crooks.

Chainalysis provided this statement:

We want to enable an entire economy powered by cryptocurrency, but sites like WTV destroy the public’s faith in the technology and slow down adoption in the legitimate economy. Fighting against them is a step in the right direction.

Brian Benczkowski, assistant attorney general of the Justice Department’s Criminal Division, added these comments:

Darknet sites that profit from the sexual exploitation of children are among the most vile and reprehensible forms of criminal behavior. This Administration will not allow child predators to use lawless online spaces as a shield.

This case, along with many others, sends a clear message to criminals, as well as to government officials, regulators, and law enforcement personnel, that the supposed cloak of anonymity that the blockchain is thought to provide is transparent. Thanks to firms like Chainalysis and others, the blockchain can no longer be perceived to be a “safe haven” for criminal activity.

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DOJ arrests 337 users of global child porn site with BTC investigative tools was first posted on October 21, 2019 at 3:41 pm.
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