Cryptocurrency. It’s the hot buzzword for many economists, investors, and stock traders. The rise and fall of Dogecoin and other virtual currencies have captivated the attention of the world and many who are hoping to make it big. While it’s made some people millionaires, there is a dark side to crypto.
New reports are emerging that show that virtual currencies are increasingly being used in human trafficking.
What are virtual currencies? What makes them so attractive to traffickers and buyers? What can be done to track or curb the use of virtual currencies in trafficking?
What is cryptocurrency (“crypto”) and virtual currencies? Crypto uses encryption technology to verify transactions and make digital payments without the use of a bank. Crypto isn’t a physical currency, instead it works as a key that allows its users to transfer “coins” that have been assigned value from one person to another.
Cryptocurrencies can avoid governmental financial institutions because they don’t need to work through banks. This makes cryptocurrency difficult to regulate by governments. Additionally, cryptocurrencies have several measures to anonymize their users and hide their personal information from law enforcement. These two factors have made cryptocurrencies such as Bitcoin a payment of choice for illegal activities such as child sexual abuse material (CSAM) and human trafficking.
A recent report from the New York Department of Treasury uncovered “over $412 million worth of suspicious activity across more than 2,311 government filings related” to child sexual exploitation and human trafficking. Bitcoin specifically has been involved in “over 90% of the reported cases.”
Over $412 million in crypto has been involved in child sexual exploitation and/or human trafficking according to this report. For some scale, $412 million is more than the gross domestic product (GDP) of the entire country of Micronesia, which totals to $404 million.
On top of the staggering amount of money involved in child sexual exploitation and human trafficking through crypto, virtual currencies have also been used as a tool in a newly emerging trafficking situation called “pig-butchering.” Pig-butchering is an international form of trafficking where traffickers use the internet and various threats to force their targets into taking advantage of other people. Basically, the perpetrators recruit people, often through fraudulent job postings, and trap them in scam centers. From there, the traffickers force these people to scam other people on the internet. The traffickers will have their victims contact other targets on social media, pretend to be in an online relationship with the new targets, and then eventually scam them into giving up money through crypto schemes. In this type of labor trafficking, those who are being trafficked are forced into doing the dirty work of scamming people for profit, and the trafficker is taking all of the crypto they steal.
Overall, the shift from physical to virtual currencies suggest that traffickers and exploiters are evolving in their methods of evading detection by law enforcement. With crypto remaining very present in the public imagination and unlikely to leave anytime soon, here’s to hoping that those dealing in virtual currencies can direct it away from the illegal and harmful activities it currently fosters.
James McWhinney. “Why Governments Are Wary of Bitcoin.” Investopedia, November 3, 2023. https://www.investopedia.com/articles/forex/042015/why-governments-are-afraid-bitcoin.asp.
kapersky. “What Is Cryptocurrency and How Does It Work?,” n.d. https://usa.kaspersky.com/resource-center/definitions/what-is-cryptocurrency.
Natashya Gutierrez. “For Trafficking Victims Forced to Scam Others, the Nightmare Continues Even After Escape.” Time (blog), December 14, 2023. https://time.com/6344077/pig-butchering-scam-trafficking-victims-trauma/.
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