Coinbase, Gemini, and others are joining forces to fight human trafficking


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Cryptocurrency exchanges Coinbase, Paxful, Gemini and BitFinex have joined the Cryptocurrency Consortium (ATCC) against human trafficking. Launched in April 2020 by the Anti-Human Trafficking Intelligence Initiative, the consortium is a non-profit organization focused on sharing information, best practices and developing tools to combat human trafficking. The ATCC brings together crypto exchanges, blockchain intelligence and law enforcement agencies to fight human trafficking and child sexual abuse material, also known as CSAM.

Aaron Kahler, chairman and founder of the Anti-Human Trafficking Intelligence Initiative, told Cointelegraph that thought leadership and information sharing in the field of cryptocurrency are critical to raising awareness of corporate social responsibility against human trafficking:

“We position 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 monitor transactions

In particular, the four exchanges that are members of the ATCC will monitor crypto transactions for trafficking-related traits. This information is then shared with all ATCC members, including intelligence services, advisory members, and law enforcement officers, to help combat illegal activity.

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 related to human trafficking and child exploitation:

“I believe that having the consortium will make this worse. Narrative keywords apply everywhere – it doesn’t matter whether they come from a peer-to-peer exchange or a regular crypto exchange. Keywords are industry wide and should be monitored across systems. “

Paxful’s Keyword Initiative reflects best practice by traditional financial institutions participating in anti-human trafficking programs. Schwartzman noted that Paxful and the other exchanges have a unique advantage in monitoring transactions because of the transparency associated with cryptocurrency:

“You don’t have that in traditional fiat. I hope any potential bad actor gets the point that you can’t use crypto for human trafficking and other illegal activities. We know who you are, we see your transactions, and we will.” Report to authorities. “

Following Schwartzman’s suggestion, John Kothanek, senior director of global intelligence at Coinbase – a digital money exchange headquartered in San Francisco – told Cointelegraph that motivated and determined people in law enforcement and the private sector will ultimately find no matter how technologically literate bad actors are may you be. Mentioning that Coinbase supports consortia like the ATCC, Kothanek noted that the initiative’s efforts are in line with Coinbase’s ethos of removing bad actors from the crypto-economy:

“Coinbase is involved in other groups whose aim is to identify illegal cash flows not only from human trafficking, but also from ransomware, fentanyl sales and money laundering.”

Crypto is clean, but it can be cleaner

Kothanek further stated that contrary to popular misconception, crypto is by and large a clean business. However, he is aware that there are bad actors. To put this in perspective, ATCC member Chainalysis, a blockchain intelligence company, published a blog post in April this year to demonstrate the impact of crypto transactions on human trafficking.

According to Chainalysis’ results, Bitcoin (BTC) and Ethereum (ETH) transactions worth $ 930,000 have been sent to addresses associated with CSAM providers. This shows a 32% increase over 2018. Interestingly, between January and March of this year, a BTC and ETH payments worth a little under $ 250,000 were traced back to CSAM providers.

Source: chain analysis

Sharing information is key

While these numbers may sound high, it’s important to note that human trafficking is a business that generates over $ 150 billion a year. This shows that the percentage of activity involving cryptocurrency transactions remains relatively low compared to traditional payments.

However, the Financial Crimes Enforcement Network issued a human trafficking notice on October 15 this year, stating that human traffickers are using “convertible virtual currency” to hide illicit income.

The document even cites a case study where a group of human traffickers bought prepaid credit cards from Vanilla Visa, which were then used to purchase bitcoin on Paxful. The group’s Bitcoin transactions have been linked to purchasing prostitution ads on one of the largest human trafficking marketplaces, Backpage, which was seized in April 2018. Use cases like this show the importance of information sharing between crypto exchanges, blockchain intelligence firms, and law enforcement corporations.

Pamela Clegg, director of financial investigations and intelligence at CipherTrace, a blockchain intelligence company and ATCC member, told Cointelegraph that information sharing and sharing between different blockchain intelligence companies will ultimately help provide additional steps in understanding the origin of information related to be found with human trafficking:

“This acts as a kind of central repository where all types of data are collected – not just crypto-related data. This information includes geographic locations, phone numbers, and more that are associated with cryptocurrency addresses. “

According to Clegg, the crypto exchanges will monitor and determine unusual features that are common in human trafficking transactions and that serve as a focus. “This is the first step,” she said. The blockchain analytics firms involved, such as CipherTrace and Chainalysis, then work side by side with law enforcement agencies to tackle illegal activity. “This is the same method used in traditional finance, where banks detect human trafficking and then alert the FBI,” she noted.