How Can Cryptocurrencies Address the Challenge of Malicious Technological Abuse by Black and Gray Market Actors?
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How Can Cryptocurrencies Address the Challenge of Malicious Technological Abuse by Black and Gray Market Actors?
Researchers discovered that cryptocurrency transactions used for human trafficking increased by at least 85% year-on-year after tracing the criminals’ cryptocurrency usage via blockchain.
Navigating Web3 tides with focused insightsBy Andy Greenberg, WIRED
Translated by Saoirse, Foresight News
Cryptocurrencies have long touted their low-barrier, cross-border, lightly regulated transaction capabilities as enabling payments to anyone, anywhere in the world. Today, that “any amount” has, alarmingly and unprecedentedly, begun to include people—victims of human trafficking forced into scam compounds or drawn into large-scale sex trafficking, openly bought and sold via cryptocurrency transactions, while perpetrators routinely evade justice.
In its latest research released recently, blockchain analytics firm Chainalysis reports an explosive surge in cryptocurrency-facilitated human trafficking in 2025. This criminal activity primarily includes laborers trapped in various scam compounds across Southeast Asia, compelled to engage in online fraud, as well as sex trafficking and prostitution rings.
By tracing cryptocurrencies used by criminal networks on the blockchain, researchers found that crypto transactions linked to human trafficking increased by at least 85% year-on-year. Chainalysis states that the total value of such transactions now reaches hundreds of millions of dollars annually. However, the company declined to provide precise figures, noting its estimates remain conservative—and the true scale is likely far greater.
“This is the continuation of industrialized exploitation,” said Chainalysis analyst Tom McLouth. “Borderless, low-fee payment methods enable human trafficking to scale up faster than ever before.”
The research found that these human trafficking operations are largely run by Mandarin-speaking criminal syndicates advertising on the instant messaging platform Telegram. Numerous posts appear in Telegram’s “escrow” black-market channels—for example, “Xinbi Escrow” and the recently shut-down “Tudou Escrow.” These channels offer cryptocurrency escrow services to prevent fraud between buyers and sellers, but they also function as massive money-laundering hubs.
Analysts successfully traced related transactions using these advertisements, law enforcement intelligence, and data from partner organizations. Nearly all such transactions use stablecoins—cryptocurrencies pegged to the U.S. dollar to avoid price volatility—such as USDT and USDC. Profits from human trafficking ultimately flow back into these Telegram escrow markets, forming a multi-billion-dollar money-laundering network.
Fraud compounds operating across Myanmar, Cambodia, and Laos—luring South Asian and African laborers with fake job offers—have become a highly lucrative industry, generating hundreds of billions of dollars annually, surpassing all other forms of cybercrime. Human rights groups estimate that hundreds of thousands of laborers are trapped inside.
Yet Chainalysis notes that the statistically measurable growth stems predominantly from sex trafficking.
Researchers discovered numerous detailed Chinese-language advertisements on Telegram offering sexual services by the hour, for extended periods, or even across borders—with destinations including Macau, Taiwan, and Hong Kong. Some ads explicitly reference suspected minors, using terms like “Lolita” or “real high school students.”
Transaction data shows funds flow not to independent sex workers but to organized syndicates controlling large numbers of women and minors:
- 62% of standard sex transactions range from $1,000 to $10,000;
- Nearly half of cross-border sex transactions exceed $10,000.
“We’re not talking about pimps controlling three or five people,” said McLouth. “We’re talking about syndicates exploiting hundreds of victims.”
Although cryptocurrency may have fueled the expansion of the sex trafficking industry, McLouth pointed out that blockchain-based cryptocurrency tracking technologies have, for the first time, exposed this long-hidden, clandestine industry to regulatory scrutiny. “It allows us to glimpse one of humanity’s oldest crimes—now rendered clearly visible,” he said.
Within the scam-compound trafficking chain, Chainalysis also found explicit, publicly listed pricing on Telegram for “introducing laborers”: $8,888 to $22,000 per person.
“Compound No. 7 enters the market strongly—welcome intermediaries to compare prices and consult,” reads a Chinese-language recruitment message posted on Telegram for a Cambodian compound, translated here. “Requirements: typing proficiency, good health, standard Mandarin fluency, no forged documents, no mental illness… Direct hiring by the compound; on-site interviews conducted by the company; salaries paid immediately.”
According to a whistleblower who contacted WIRED last year from inside a scam compound, trafficked workers typically have their passports confiscated by compound managers and are forced to work 15–16 hours daily, deploying text-based scams targeting Western victims. Some fall into debt bondage, while others are imprisoned within walled compounds and subjected to beatings or electric shocks for rule violations or failure to meet scam quotas.
This is a Chinese-language post offering sexual services on Telegram, detailing physical attributes and services provided. Image courtesy of Chainalysis.
Erin West, former prosecutor for Santa Clara County, California, noted that whether involving sexual exploitation or scam compounds, cryptocurrency-facilitated human trafficking shares two key features: Telegram serves as the primary trading platform, and stablecoins—particularly the dominant centralized stablecoin Tether, according to other reporting—function as the main payment instrument. West currently leads Clover Action, an anti-scam initiative. She stated that both companies could take significantly more action to prevent enabling human trafficking: Telegram could ban relevant accounts, while Tether—as a centralized currency unlike Bitcoin—could freeze or seize assets. Yet she believes both companies are complicit in allowing these crimes to persist using their platforms and tools.
“Why can Telegram and Tether profit so comfortably from human exploitation, when they know full well what’s happening?” West asked. “Funds flow through their platforms, and transactions occur openly in public channels. We can clearly identify core bad actors—curbing them would dramatically reduce both public discussion and payment for these horrific acts.”
When WIRED contacted Tether regarding its role in human trafficking activities, the company responded in a statement: “We condemn human trafficking, forced labor, and sexual exploitation in the strongest possible terms. We maintain a zero-tolerance policy toward any abuse of USDT or related technologies to facilitate such crimes.” The statement noted that Tether has collaborated with over 330 global law enforcement agencies across 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 it partners with and funds multiple United Nations–affiliated initiatives focused on combating human trafficking and scam operations.
“It is essential to distinguish criminal misuse of financial tools from the tools themselves,” read Tether’s statement. “Stablecoins—like all widely adopted financial instruments—can be exploited by bad actors. Yet public blockchains afford law enforcement a degree of transparency and traceability wholly absent in cash-based trafficking networks, which remain the dominant payment method globally for such crimes.”
When WIRED contacted Telegram, the company replied in a statement: “Telegram’s Terms of Service explicitly prohibit criminal activities such as human trafficking and money laundering, and we remove such content immediately upon detection.” The company also referenced its platform moderation statistics page and highlighted its May last year takedown of the “Xinbi Escrow” channel and the larger black-market channel “Hui’an Escrow” on Telegram. (In fact, both black markets reemerged in the following months: Xinbi Escrow rebuilt its Telegram channel, while Hui’an Escrow rebranded as “Tudou Escrow.”)
Telegram’s statement added: “Beyond responding to user and NGO reports, Telegram maintains a large-scale moderation team equipped with custom AI tools that proactively monitor the platform, removing millions of harmful messages daily.”
Meanwhile, crypto-tracking firm TRM Labs recently observed that Xinbi Escrow appears to have recognized the risk of longer-term bans by Telegram and shifted part of its operations to another messaging app called SafeW—though its core business remains active on Telegram.
Chainalysis’ human trafficking research also examined cryptocurrency use in transactions involving child sexual abuse material (CSAM). Though CSAM transactions constitute a much smaller share of overall crypto activity, the harm inflicted on minor victims is incalculable. Chainalysis found that roughly half of CSAM transactions involve amounts under $100, underscoring how cheap and accessible such material—including AI-generated content—has become. More disturbingly, CSAM originating from abusive online communities such as “Heartbreak” is increasingly appearing on commercial marketplaces and sold via cryptocurrency. These communities often coerce minors into producing explicit videos through sextortion.
Chainalysis found that, unlike the sex trafficking and scam-compound trafficking documented in its report, CSAM transactions still rely primarily on Bitcoin—even though most associated trading platforms now use Monero, a highly privacy-focused “privacy coin,” to launder proceeds.
The UK-based nonprofit Internet Watch Foundation (IWF), which partners with Chainalysis on research, reported that since beginning to track crypto markets for CSAM five years ago, cryptocurrency-facilitated CSAM transactions have risen steadily. Although Bitcoin is inherently traceable, its cross-border payment functionality enables operators to host content in foreign jurisdictions—often the United States—significantly complicating enforcement. “It’s simple to operate—and cross-border,” said an IWF analyst, speaking anonymously due to the sensitivity of the work. “You can sit on one side of the world and run these services on the other.”
Chainalysis contends that although cryptocurrency’s role in facilitating human trafficking is deeply troubling, it simultaneously presents law enforcement with new opportunities to combat the industry. McLouth emphasized that key vulnerabilities include the centralized stablecoin systems traffickers rely on, and the multi-billion-dollar Telegram-based escrow markets that serve as cash-out conduits for these exploitative industries.
“These are excellent entry points for law enforcement action,” said McLouth. “But they must act swiftly and invest more resources to fully map out the entire operational model—because criminal tactics continue to evolve.”
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