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British start-up aims to catch people using bitcoin to pay for child porn

London-based Elliptic develops tool to trace suspicious bitcoin transactions

PUBLISHED : Wednesday, 06 July, 2016, 3:00pm
UPDATED : Wednesday, 06 July, 2016, 4:37pm

Non-profit organisation the Internet Watch Foundation (IWF) has teamed up with blockchain start-up Elliptic to combat the use of bitcoin to buy child sex abuse images online, the two said on Wednesday.

The cryptocurrency bitcoin is often used to purchase illicit items online from illegal drugs to child pornography due to the anonymity it affords buyers.

But London-based start-up Elliptic – which raised US$5 million earlier this year – has developed a tool which can trace suspicious transaction patterns of bitcoin due to the open nature of the cryptocurrency platform. All bitcoin transactions are recorded on the blockchain – a public ledger of activity. Elliptic manages to trawl through this to identify suspicious activity and then can use this to link transactions together and get an idea of where the money is moving and which payments are linked.

Elliptic works with top U.S. and European bitcoin exchanges – the entity that processes transactions in the cryptocurrency – as well as law enforcement to identify activity such as money laundering, drug sales, extortion and theft.

The IWF's mission is to combat child sex abuse content online. It does this through tips from members of the public who come across an illicit website, as well as trawling through the net looking for illegal content. The organisation then reports this to the police but noticed an increasing number of sites accepting bitcoin as a method of payment for child porn.

"It's not massively new, but the use of it on child sex abuse sites has been increasing," Fred Langford, deputy CEO of the IWF says.

"Most of the sites we are seeing taking bitcoin payments are not on the a dark web, people on the open web abusing cloud services to host their commercial entities, and they take bitcoin."

The IWF now has a big database of child sex abuse sites known to be accepting bitcoin. This database can be integrated with Elliptic's technology to figure out where the money is moving. When a picture of transactions is built up, the information can be used by law enforcement to try and track down the criminals.

"Sometimes payments are made for things like images for bitcoin, and they have bitcoin addresses that link to child abuse. So they have got quite a useful database of information and we have integrated that with our system so we can identify any bitcoin activity that has links to those known websites," according to James Smith, CEO of Elliptic.