Funding of Child Sexual Abuse Material (CSAM) Through Cryptocurrency Exchanges

Executive Summary

Child sexual abuse material (CSAM) represents one of the most egregious forms of exploitation, and cryptocurrency has emerged as a preferred payment method for perpetrators due to its perceived anonymity and ease of cross-border transactions. This report analyzes proprietary data from DarkScout Intelligence, a Darknet Intelligence and blockchain analytics firm specializing in early detection of illicit activities, revealing that major exchanges like Coinbase, Binance, and Revolut inadvertently facilitate funding to CSAM-related addresses. Key findings from a sample dataset include positive lead times in over half of cases, with average lead time of approximately 5.4 days when excluding outliers, underscoring the potential for proactive intervention.

Integrating external research from sources like Europol, the National Center for Missing & Exploited Children (NCMEC), the Financial Action Task Force (FATF), Protect Us Kids, and Childlight, the report highlights the growing scale of crypto-enabled CSAM, with illicit entities leveraging AI and privacy tools. However, the inherent traceability of blockchain transactions, combined with advanced heuristics and clustering, enables platforms like DarkScout to overcome detection challenges, providing critical intelligence to disrupt these networks ahead of funding events.

Recommendations emphasize enhanced due diligence by exchanges and adoption of real-time monitoring tools to mitigate risks.

Introduction: The Persistent Threat of CSAM Funding via Cryptocurrency

The proliferation of CSAM on the darknet has been exacerbated by cryptocurrency, which offers pseudonymous transactions that bypass traditional financial oversight. According to Europol's reports, cryptocurrencies like Bitcoin are commonly used for payments in child exploitation cases, often involving live-streamed abuse and extortion, with transaction volumes escalating in recent years. The Financial Action Task Force (FATF) emphasizes the escalation in live-streamed abuse funded by crypto, calling for better tracing mechanisms. Statistics from the National Center for Missing & Exploited Children (NCMEC) indicate a spike in online child exploitation reports, with CyberTipline submissions surging in the first half of 2025 compared to the previous year, many involving crypto payments. Protect Us Kids' 2025 report reveals an alarming surge in AI-driven exploitation, with privacy tools facilitating crypto transactions. Childlight's Searchlight 2025 estimates CSAM as a multibillion-dollar industry, with crypto enabling anonymous monetization on darknet forums. This report draws on a sample dataset of CSAM-related Bitcoin addresses from DarkScout to quantify exchange involvement, while contextualizing the broader ecosystem challenges.

Data Analysis: Insights from DarkScout Intelligence

DarkScout Intelligence monitors blockchain activity to attribute addresses to illicit entities, focusing on CSAM sites on the darknet. The sample dataset spans attributions gathered in previous weeks, capturing funding events where addresses received cryptocurrency post-attribution. A positive value in "calculated_diff_days" indicates DarkScout gathered intelligence on the address before it was funded, enabling potential preemptive action.

Key Metrics from Sample Dataset

• Overall Average Lead Time (Excluding Outliers): Approximately 1.8 days
• Overall Median Lead Time (Excluding Outliers): 1.4 days
• Positive Lead Time Cases: Over half of entries, with an average of approximately 5.4 days and median of 3.5 days (excluding outliers)

These metrics demonstrate DarkScout's capability to identify threats early, often days ahead of funding, through techniques like behavioral clustering and darknet scraping.

Top Centralized Exchange Funders of CSAM

Analysis of a recent sample dataset reveals that centralized exchanges are primary funding sources in previous weeks, often unknowingly, as users withdraw to CSAM-linked addresses.

Note: "Others" includes all remaining entities (e.g., Crypto.com, Blockchain.com, etc.) each contributing less than 5.5%. This reflects on-ramp points where legitimate exchange users withdrew funds that later flowed to CSAM-linked addresses.

This distribution highlights how legitimate platforms can serve as gateways to illicit activities, with funding often originating from user wallets on these exchanges before transferring to darknet operators.

External Context: The Broader Landscape of Crypto-Enabled CSAM

External reports corroborate DarkScout's findings, showing crypto's role in revitalizing commercial CSAM. Europol's 2025 operations, such as the shutdown of the Kidflix platform, involved tracing cryptocurrency payments that facilitated child exploitation on a massive scale. The FATF's 2025 report on online child sexual exploitation details how criminals use mixers, privacy coins, and decentralized exchanges to obscure trails, with CSAM transactions often embedded in broader criminal economies. NCMEC's mid-2025 data shows a surge in reports driven by AI and evolving tactics, including crypto-funded sextortion. Protect Us Kids highlights the state of online child safety in 2025, noting how generative AI exacerbates crypto-enabled abuse. Childlight's Into the Light Index 2025 underscores legal gaps in addressing AI-generated CSAM, with privacy-enhanced platforms enabling financial flows.

These sources align with the sample dataset, where a majority of funding traces to exchanges, mirroring broader trends of "on-ramping" illicit funds.

Challenges in Identifying CSAM Addresses and Infrastructure

Detecting darknet CSAM payments is fraught with obstacles:

• Anonymity Tools: Perpetrators use Tor networks, mixers, and privacy coins to obfuscate transactions, as noted in Europol's IOCTA assessments.
• Dynamic Infrastructure: CSAM sites frequently rotate addresses and domains, evading static blacklists. Childlight reports that vendors adapt to enforcement by leveraging privacy tools.
• Volume and Speed: High transaction throughput on blockchains like Bitcoin makes real-time monitoring resource-intensive, with FATF highlighting delays in tracing due to cross-jurisdictional issues.
• Behavioral Complexity: Clustering addresses requires sophisticated machine learning to link patterns, as traditional heuristics fail against advanced evasion tactics.

These challenges result in "unknown unknowns," where emerging threats go undetected until after funding, as seen in major takedowns like Kidflix.

How DarkScout Intelligence Addresses These Challenges

DarkScout has refined methodologies to detect CSAM infrastructure early, achieving positive lead times in over half of cases. By integrating darknet scraping, Taproot-specific clustering (e.g., revealing reused addresses via Merkle paths), and machine learning models, DarkScout attributes identities to addresses before funding. This agile, behavior-based approach provides real-time intelligence on threats like new darknet markets and CSAM site deployment and disrupting the dynamic nature of their infrastructure. We have not only mapped the patterns in how they move crypto, we have mapped their darknet infrastructure and operations allowing us this intelligence before it hits the blockchain.

For instance, in the sample dataset, entries with lead times up to 113 days demonstrate proactive detection, tying back to DarkScout's focus on iterative refinement and graph-based analysis for high-accuracy attribution.

Conclusion

Cryptocurrency's role in CSAM funding is a pressing issue, with exchanges like Coinbase and Binance serving as unwitting conduits for illicit transfers. DarkScout's sample dataset reveals opportunities for early intervention, with positive lead times in over half of cases averaging approximately 5.4 days when excluding outliers, while external reports underscore the multibillion-dollar scale and evolving tactics of perpetrators.

By perfecting detection of darknet CSAM addresses through advanced blockchain analytics, DarkScout enables compliance teams and law enforcement to block payments preemptively, reducing blind spots in traditional systems.

Recommendations

• Exchanges should implement real-time wallet screening using tools like DarkScout's API to flag CSAM-linked addresses.
• Regulators mandate enhanced KYC for high-risk withdrawals and collaborate on global tracing standards.