Chainalysis reveals alarming growth of China-based CSAM networks using cryptocurrencies

In recent months, a worrying trend has emerged in the world of crypto crime.

According to the latest Chainalysis report shared with CryptoPotato, there has been a significant increase in vendors from China involved in the distribution of child sexual abuse material (CSAM). The report sheds light on a sharp rise in CSAM networks operating from China and the sophisticated ways these vendors use cryptography to facilitate their heinous activities.

Crypto Crime Spike

Chain analysis revealed a notable increase in activity in the chain associated with CSAM vendors in China. Since the end of 2023, there has been an increase in the proportion of global CSAM inflows denominated in yuan, with China-based providers capturing up to 38.8% of total CSAM inflows in the first quarter of 2024.

Inflows to China-based CSAM

One of the most alarming aspects of this trend is the use of crypto to facilitate these transactions. The report provided a detailed analysis of the chain of payments received by CSAM vendors, illustrating how these operators leverage crypto assets for financial transactions. Buyers can purchase access to CSAM material for as little as $5 for a single day or about $41 for near-permanent access.

The rise of these sellers coincides with the appearance of new chain infrastructures. The report notes that many of these China-based wallets are relatively recent, with some dating back to mid-2023. This suggests that these networks are not only exploiting existing systems, but are actively expanding and developing new mechanisms to avoid detection.

CSAM subscription fees

CSAM sellers have been found to take advantage of instant exchangers to get paid. According to Chainalysis, instant exchanges represent a form of non-custodial platform, but are much easier to use compared to their decentralized counterparts. These platforms often support a wider variety than retail exchanges and convert funds immediately.

Huione Guarantee: A major hub for cybercrime and fraud

Chainalysis has also seen an increase in the use of Chinese-language money laundering markets and networks, including Huione Guarantee, an online marketplace linked to Cambodian conglomerate Huione Group. As previously reported, Huione has been exposed as a major player in facilitating cybercrimes, including CSAM distribution and pig butchering scams.

Processing over $49 billion in crypto transactions as of 2021, this platform operates as a peer-to-peer platform that connects buyers and sellers without verifying the legitimacy of listed goods. This service has been widely used by various criminal networks, including those behind high-grossing scams and illicit activities.

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