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Cryptocurrency exchanges Coinbase, Paxful, Gemini, and BitFinex have all joined the Anti-Human Trafficking Cryptocurrency Consortium, or ATCC. Launched in April 2020 by the Anti-Human Trafficking Intelligence Initiative, the consortium is a non-profit organization focused on sharing intelligence, best practices and developing tools to combat trafficking. The ATCC brings together cryptocurrency exchanges, blockchain intelligence firms and law enforcement to combat human trafficking and child pornography material, also known as CSAM.
Aaron Kahler, president and founder of the Anti-Human Trafficking Intelligence Initiative, told Cointelegraph that thought leadership and information sharing within the cryptocurrency space are vital to creating awareness for corporate social responsibility against trafficking. human beings:
“We are positioning organizations to play an active role in the prevention, detection and reporting of human trafficking and child exploitation. The Anti-Human Trafficking Intelligence Initiative and ATCC are developing comprehensive programs, training, data and tools to combat the problem. “
Crypto exchanges are monitoring transactions
In particular, the four member exchanges of the ATCC will monitor cryptographic transactions to detect characteristics associated with human trafficking. This information will then be shared among all ATCC members, including intelligence companies, advisory members and law enforcement officials to help combat illegal activities.
Lana Schwartzman, chief compliance officer at Paxful – an over-the-counter peer-to-peer exchange – told Cointelegraph that she is personally working on a keyword initiative for Paxful that includes specific terms associated with human trafficking and to the exploitation of minors:
“I believe this will have a greater impact with the participation of the consortium. Narrative keywords apply everywhere – it doesn’t matter if they come from a peer-to-peer exchange or a regular cryptocurrency exchange. The keywords are industry-wide and should be monitored across all systems. “
Paxful’s keyword initiative reflects a best practice implemented by traditional financial institutions that participate in anti-trafficking programs. Schwartzman noted that Paxful and other exchanges have a unique advantage when it comes to tracking transactions thanks to the transparency associated with cryptocurrency:
“You don’t have this in traditional fiat. I hope every potential bad actor understands that you cannot use encryption for human trafficking and other illegal activities. We know who you are, we see your transactions and we will report you to the authorities. “
Echoing Schwartzman, John Kothanek, senior director of global intelligence at Coinbase – a San Francisco-based digital currency exchange – told Cointelegraph that no matter how technologically competent bad actors, motivated and determined people may be law enforcement and private industry will eventually find them. Kothanek said Coinbase supports consortia like the ATCC, noting that the initiative’s efforts align with Coinbase’s ethics of removing bad actors from the crypto economy:
“Coinbase is involved with other groups whose goals are to identify illicit flows of criminal money not only from human trafficking, but also from ransomware, fentanyl sales and money laundering.”
Crypto is clean but it can be cleaner
Kothanek further said that contrary to popular misconceptions, cryptography is generally a clean business. However, he is well aware that bad actors exist. To put this into perspective, ATCC member Chainalysis, a blockchain intelligence firm, published a blog post in April this year to demonstrate the impact crypto transactions have on human trafficking.
According to the results of Chainalysis, Bitcoin (BTC) and Ethereum (ETH) transactions worth approximately $ 930,000 were sent to addresses associated with CSAM providers in 2019. This demonstrates a 32% increase from 2018. Interestingly, between January and March of this year, just under $ 250,000 in BTC and ETH payments were traced back to CSAM providers.
Sharing information is essential
While these numbers may seem high, it is important to note that human trafficking is an activity that generates over $ 150 billion annually. This shows that the percentage of activity involving cryptocurrency transactions remains relatively low compared to traditional payments.
However, on October 15 this year, the Financial Crimes Enforcement Network issued a warning on human trafficking stating that the “convertible virtual currency” is used by human traffickers to hide illicit proceeds.
The paper also cites a case study in which a group of human traffickers bought Vanilla Visa prepaid credit cards which were then used to buy Bitcoin on Paxful. The group’s Bitcoin transactions have been linked to the purchase of prostitution ads on one of the largest human trafficking markets, Backpage, which was seized in April 2018. Use cases like this demonstrate the importance of sharing of information between cryptocurrency exchanges, blockchain intelligence firms, and law enforcement.
Pamela Clegg, director of financial investigations and education at CipherTrace, a blockchain intelligence firm and member of the ATCC, told Cointelegraph that sharing information between different companies and blockchain intelligence exchanges will ultimately help provide additional steps for understand where information related to human trafficking comes from:
“This serves as a kind of central repository, where all kinds of data are collected, not just crypto-related data. This information includes geographic locations, phone numbers and more associated with cryptocurrency addresses.”
According to Clegg, cryptocurrency exchanges will monitor and determine unusual characteristics commonly seen with human trafficking transactions, serving as a focal point. “This is the first step,” he said. The blockchain analytics companies involved, such as CipherTrace and Chainalysis, then work side-by-side with law enforcement to combat illicit activities. “This is the same method of traditional finance, where banks detect human trafficking movements and then alert the FBI,” he noted.
