By Andy Greenberg, Wired Magazine
Compiled by: Saoirse, Foresight News
Original title: How can cryptocurrencies address the problem of technology abuse by black market operators ?
Cryptocurrencies, with their low barriers to entry, cross-border nature, and lack of regulation, have long touted themselves as enabling people to pay any fee to anyone in the world. Now, however, this "any fee" is unprecedentedly beginning to include people—victims of trafficking are forced into scam parks or involved in large-scale transactions, openly bought and sold in cryptocurrency exchanges, while perpetrators often go unpunished.
A recent study by crypto tracking firm Chainalysis indicates that cryptocurrency-backed human trafficking will experience explosive growth in 2025. These crimes primarily involve laborers trapped in various industrial parks across Southeast Asia and forced into online fraud, as well as sex trafficking and prostitution rings.
Researchers have found that cryptocurrency transactions used for human trafficking have increased by at least 85% year-over-year after tracking the use of cryptocurrencies by criminal gangs using blockchain technology. Chainalysis says these transactions now total at least hundreds of millions of dollars annually. However, the company declined to provide precise figures, as its estimates are conservative and the actual size is likely much higher.
Chainalysis analyst Tom McLouth said, "This is a continuation of industrialized exploitation. Borderless, low-fee payment methods allow human trafficking to scale up more rapidly."
Research has found that these human trafficking activities are primarily operated by Chinese-speaking criminal groups who advertise on the instant messaging app Telegram . Numerous posts appear on Telegram's "escrow" black market channels, such as "New Coin Escrow" and the recently shut-down "Potato Escrow." These channels offer cryptocurrency custody services to prevent both parties from being scammed, but they also serve as massive money laundering hubs.
Analysts successfully tracked down the transactions using these advertisements, law enforcement information, and data from partner organizations. These transactions almost entirely used stablecoins—cryptocurrencies pegged to the US dollar and protected from price volatility, such as USDT and USDC. The substantial profits from human trafficking ultimately flowed back into these Telegram-secured markets, forming a multi-billion dollar money laundering network.
In Myanmar, Cambodia, and Laos, fraudulent work zones that lure South Asian and African laborers with fake jobs have become a highly profitable industry, generating hundreds of billions of dollars in revenue annually, exceeding any other form of cybercrime. Human rights organizations estimate that hundreds of thousands of laborers are trapped in these zones.
However, Chainalysis points out that most of the statistically significant growth comes from sex trafficking.
Researchers discovered numerous detailed Chinese advertisements on Telegram offering sexual services by the hour, long-term, and even internationally, with destinations including Macau, Taiwan, and Hong Kong. Some advertisements even openly mentioned individuals suspected of being minors, using terms like "Lolita" and "real high school student."
Transaction data shows that the funds flowed to organizations that control large numbers of women and minors, rather than to independent sex workers:
62% of regular transactions are between $1,000 and $10,000;
Nearly half of cross-border transactions exceeded $10,000.
“We’re not talking about pimps controlling three or five people,” McLouth said, “but hundreds of victims.”
While cryptocurrencies may have fueled the expansion of the sex trafficking industry, McLouth points out that the technology of tracking cryptocurrencies through blockchain has also brought this long-standing, clandestine industry into the regulatory spotlight for the first time. "This allows us to glimpse one of humanity's oldest crimes, now clearly visible," McLouth stated.
Chainalysis also discovered that in the human trafficking fraud park chain, Telegram openly advertised prices for "introducing laborers": $8,888 to $22,000 per person.
"Park No. 7 is now officially open for business. Agents are welcome to compare prices and inquire." This is the translated Chinese text of a Telegram message recruiting Chinese-speaking staff for a park in Cambodia. "Requirements: typing skills, good health, fluent Mandarin, no falsified documents, no mental illness... Direct recruitment by the park, on-site interviews at the company, immediate salary payment."
According to a whistleblower who contacted Wired magazine from inside the scam park last year, trafficked workers were typically stripped of their passports by park management and forced to work 15 to 16 hours a day to scam Western victims through text-based fraudulent messages. Some became trapped in debt, while others were directly imprisoned in the walled park, where they were beaten and electrocuted for violating rules or failing to meet fraud targets.
This is a Chinese post on Telegram offering sexual services, detailing the physical attributes of the individuals involved and the services they provide. Image provided by Chainalysis.
Former Santa Clara County District Attorney Erin West points out that the cryptocurrency-backed human trafficking industry, whether it's sexual exploitation or fraud rings, shares two common characteristics: using Telegram as a transaction platform and stablecoins—especially the mainstream stablecoin Tether, according to other reports. West, who currently heads an anti-fraud organization called "Operation Shamrock," states that both companies could have done more to prevent facilitating human trafficking: Telegram could ban related accounts, and Tether, unlike Bitcoin, is a centralized currency that could seize or freeze assets. However, she believes both companies have been condoning the continued use of their platform tools by these criminal activities.
"Why can Telegram and Tether profit from the exploitation of people with a clear conscience? They know perfectly well that this is happening. Funds flow through their platforms, and transactions take place in public channels," West said. "We can clearly identify some key perpetrators, and if we can contain them, we can significantly reduce people's willingness to publicly discuss these horrific acts and pay for them."
After Wired magazine contacted Tether regarding its role in human trafficking, Tether issued a statement saying, "We condemn human trafficking, forced labor, and sexual exploitation in the strongest terms, and we have zero tolerance for the misuse of USDT and related technologies to facilitate such crimes." The statement mentioned that Tether has cooperated with 330 law enforcement agencies worldwide in more than 2,000 cases, freezing approximately $4 billion worth of Tether and reissuing nearly $1 billion for asset recovery and victim compensation. Tether also stated that it collaborates with and provides funding to several UN-related projects focused on combating human trafficking and fraud.
"It is essential to distinguish between the criminal misuse of financial instruments and the instruments themselves," Tether stated. "Stablecoins, like all widely used financial instruments, can be exploited by criminals. However, public blockchains offer law enforcement a level of transparency and traceability that is entirely absent in cash-based trafficking networks, where cash transactions remain the primary means of payment for such crimes globally."
When contacted by Wired, Telegram responded in a statement: "Telegram's Terms of Service explicitly prohibit criminal activities such as human trafficking and money laundering. Upon discovery, we will immediately delete the relevant content." The company also mentioned its platform's data review page and the blocking of the "New Coin Guarantee" and the larger black market "Hui An Guarantee" Telegram channels last May. (In fact, both black markets resurfaced in the following months: New Coin Guarantee rebuilt its Telegram channel, and Hui An Guarantee changed its name to Potato Guarantee.)
Telegram's statement said, "In addition to receiving reports from users and NGOs, Telegram has a large moderation team that proactively monitors the platform using customized AI tools, removing millions of pieces of harmful content every day."
Cryptocurrency tracking company TRM Labs recently pointed out that Newcoin Escrow seems to have realized the risk of a longer ban from Telegram and has moved some of its business to another instant messaging software called SafeW, but its core business is still running on Telegram.
Chainalysis's research on human trafficking also touches on the use of cryptocurrency in the trade of child sexual abuse material. While these transactions represent a much smaller percentage of total cryptocurrency transactions, their harm to underage victims is immeasurable in monetary terms. Chainalysis found that approximately half of the child sexual abuse material transactions were for less than $100, highlighting how cheap and readily available such material—including AI-generated content—has become. Even more disturbing is the increasing presence of child sexual abuse content from sadistic online communities like "Sadistic," which often use sexual blackmail to force minors to film explicit videos, appearing on commercial trading platforms and sold via cryptocurrency.
Chainalysis found that, unlike other sex trafficking and fraudulent human trafficking in academies documented in the report, the trading of this type of child sexual abuse material is still primarily conducted in Bitcoin, although most of the trading platforms now use Monero—a "privacy coin" that is extremely difficult to trace—to launder the proceeds.
The Internet Watch Foundation, a UK-based nonprofit organization that collaborates with Chainalysis on research, says the use of cryptocurrencies to trade child sexual abuse material has been steadily rising since it began tracking the cryptocurrency market five years ago. While Bitcoin is traceable, its cross-border payment nature allows operators to hold content in other countries—typically the US—significantly increasing the difficulty of law enforcement. "It's easy to do, and it's cross-border," said an analyst at the Internet Watch Foundation who requested anonymity due to the sensitivity of their work. "You can be on one side of the world and operating these services on the other."
Chainalysis believes that while the role of cryptocurrencies in human trafficking is worrying, it also presents an opportunity for law enforcement to crack down on the industry. Chainalysis's McLouth suggests that key vulnerabilities include the centralized stablecoin systems used by traffickers, and the multi-billion dollar collateralized market running on Telegram that provides a cash-out channel for these exploitative industries.
"These are excellent entry points for law enforcement to crack down on these crimes," McLouth said. "But they must act quickly and invest more resources to understand the entire operating model because criminal methods are constantly evolving."
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