Updated: Jun 8, 2022
The Government Accountability Office (GAO) WatchBlog post, “As Virtual Currency Use in Human and Drug Trafficking Increases, So Do the Challenges for Federal Law Enforcement,” 24 Feb 2022, is a nice summary of a series of recent reports about what the federal government is doing about the issue of virtual currencies—for example cryptocurrencies—increasingly being used in illegal activities, such as human and drug trafficking, and provides recommendations to improve its response.
The increased Use of Online Marketplaces and Virtual Currencies in Trafficking
The human trafficking process has increasingly taken advantage of technology and moved online, with recruitment, contacts, the advertising of services, "hobby boards" (review sites for sex services), "sugar dating" (dating sites that include commercial arrangements), and much more taking place in the online realm, all exacerbated by the COVID-19 pandemic.
Online marketplaces are also increasingly being used for sex and illegal goods trafficking. These marketplaces are sometimes located on the “dark web,” a hidden part of the internet where users access sites using specialized software (e.g. Tor) to connect to buyers and sellers. The dark web can provide some anonymity and limit the risk of detection by law enforcement. In contrast, data from surface web platforms (e.g. Google, Bing) are readily available to the public and law enforcement.
Drug and human traffickers use virtual currency and peer-to-peer mobile payments because transactions are somewhat anonymous, making detection more difficult. For example, virtual currencies are being used more often on platforms that could facilitate sex trafficking. In its report, “Sex Trafficking: Online Platforms and Federal Prosecutions,” GAO-21-385, 21 Jun 2021, the GAO found that 15 of the 27 online commercial sex marketplaces that were examined accepted virtual currencies. Also, virtual currency ATMs (kiosks)—stand-alone machines that facilitate buying, selling, and exchange of virtual currencies—can be used by sex traffickers to exploit victims and connect with buyers.
Gretta Goodwin and John Pendleton’s podcast transcript, “How Virtual Currencies Are Used in Human and Drug Trafficking,” GAO, Jan 2022, provides additional information on how virtual currency kiosks work and the challenges in tracking them.
How is the Federal Government Combating the Illicit Use of Virtual Currencies?
Several federal agencies are tasked with investigating and prosecuting trafficking cases that involve online marketplaces and virtual currency. These include federal law enforcement entities inside the Department of Justice (DOJ), such as the Drug Enforcement Administration (DEA) and Federal Bureau of Investigations (FBI), as well as the Department of Homeland Security (DHS). Other agencies, including the Department of the Treasury (Treasury), support investigations of trafficking cases.