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[Pegasus]

Pedophiles and criminals engaged in child cybersex are proliferating in the Philippines as the cybersex industry becomes more sophisticated and profitable despite numerous crackdowns both by local and foreign authorities, according to a report by Channel News Asia.

Citing a study by the Financial Coalition Against Child Pornography and the International Centre for Missing & Exploited Children titled Cryptocurrency and the BlockChain, it said that encrypted payment systems involving cryptocurrencies and Bitcoin are driving the proliferation of live-streaming child sexual abuse. On average, live abuse or when a user instructs the children to perform sexual acts, cost around 10 Bitcoins when it was still worth $10,000, but a live-stream view-only would cost one Bitcoin.

“[The distinct character of cryptocurrencies] likewise, of course, has significant implications for criminal activity and its investigation, analysis, and prosecution as well.  In that criminal realm, there is clear evidence that Bitcoin has made significant inroads into commercial sexual abuse material, the sex trade and in the exploitation and trafficking of minors and adults alike.

“While Bitcoin does provide significant barriers to identification of individuals, it is not, contrary to the misinformation common in media reports, completely anonymous.  In fact, it is far from it," the study said.

According to the study, Bitcoin and other digital currencies would soon gain mass adoption with many users attempting to spend their cryptocurrencies with mainstream online or brick-and-mortar sellers that accept digital currencies, or convert them into more commonly accepted fiat currency such as dollars or euros.

However, the mass acceptance of Bitcoin and its increased usage in the real world provide an “investigative choke point” that can lead the authorities to the user’s identity.

It said these chokepoints should be seen as critical breaks for the investigators and prosecutors of crypto-transacted child exploitation.

The study added:

“Cryptocurrencies make the task of combating commercial child sexual exploitation a bit challenging and a bit more difficult compared to the past, but the same was true of e-Gold, PayPal and a dozen other payment systems when they first emerged.  Some, like e-Gold, tried to go around the law, and the law won. Others, like PayPal, insisted in taking the fight to offenders and are now recognized as world leaders in this effort.”

A similar report titled A Quantitative Analysis of the Impact of Arbitrary Blockchain Content on Bitcoin had documented that some content, including illegal pornography, could be embedded in cryptocurrency blockchain. The study said criminals had found ways to insert illicit content into blockchain.

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