Bitcoins used in child sex abuse deals targeted

Bitcoins used to buy images of child sex abuse could soon be tracked and blocked as two companies share data on how the virtual currency is spent.

The Internet Watch Foundation (IWF), which tracks abuse sites, is passing data to start-up Elliptic, which helps Bitcoin exchanges monitor transactions.

The data comes from transactions carried out on sites the IWF monitors

The IWF said the “pseudo-anonymity” offered by bitcoins made them an increasingly popular form of payment.

Money web

“We are seeing it being used on the more dedicated commercial abuse sites that we monitor on a regular basis,” said Sarah Smith, IWF’s technical researcher.

Ms Smith said the IWF had first noticed the virtual currency being used in 2014 alongside other payment systems, but its use on abuse sites was growing alongside other illicit use of the virtual cash.

Bitcoins’ “pseudo-anonymity” made it a very attractive payment system in criminal circles, she added.

The IWF’s work to disrupt abuse sites had left it with a list of Bitcoin addresses associated with sites selling abuse content and their customers, said Ms Smith.

This list and any other addresses the IWF finds are being passed to tech company Elliptic to help in its work to curb criminal use of bitcoins.

“This is the first time anybody has started identifying these crimes in Bitcoin and flagging them up in a system like ours,” said James Smith, head of Elliptic, adding that it was a “great step” towards eliminating illicit use of bitcoins.

Elliptic analyses the Bitcoin blockchain – the virtual currency’s central ledger in which every deal done with the digital cash is recorded – to spot stolen coins, to trace transactions that seek to hide their criminal origins or to conceal the illegal uses to which they are put.

It passes information about the web of dodgy transactions to exchanges and other merchants to help them avoid doing business with “known bad actors” and to stop them being inadvertently enrolled in money-laundering schemes.