U.S., South Korea Bust Giant Child Porn Site by Following a Bitcoin Trail





(Bloomberg) -- U.S. and Korean authorities say they broke up one of the world's largest markets for child pornography, a crime that is proliferating at a furious pace with the rise of cryptocurrency and encrypted online content.

The bust was revealed Wednesday as the U.S. unsealed an indictment against Jong Woo Son, 23, who prosecutors say operated a Darknet market that accepted Bitcoin and distributed more than 1 million sexually explicit videos involving children. Son, a South Korean national, is serving 18 months in prison after being convicted there.

Since agents shuttered the site in March 2018, authorities have arrested 337 site users around the world. They were in countries including the U.K., Germany, Brazil, Saudi Arabia and the United Arab Emirates, and in nearly two dozen U.S. states, according to U.S. authorities. The U.K. government said people in 38 countries were arrested.

The site, which encouraged users to upload videos, included hundreds of thousands of illicit images not previously seen by authorities. Authorities say they rescued at least 23 minor victims in the U.S., U.K. and Spain who were being actively abused by users of the site, which operated from June 2015 until March 2018.

"What we are here to discuss today, the sexual exploitation of children, is one of the worst forms of human evil imaginable," Jessie Liu, the U.S. attorney for the District of Columbia, said Wednesday as she announced the charges. She added, "Children around the world are safer because of the actions taken by U.S. and foreign law enforcement to prosecute this case and recover funds for victims."

Images of sexual exploitation have mushroomed since 2014, when the National Center for Missing and Exploited Children received reports of 1.1 million incidents of child pornography. By last year, that number had risen to 18.4 million.

The Darknet refers to encrypted online content that hides from traditional search engines. The anonymity of the Darknet has fostered crimes like narcotics trafficking, money laundering and child pornography, prosecutors say. Cryptocurrency also has been cited in a wide range of crimes in which people seek to move money anonymously around the world.

Son's site, called Welcome to Video, contained more than 250,000 unique videos. Of those, 45% contained new images that were previously unknown, according to the National Center for Missing and Exploited Children.

The site operated as a "hidden service" on the Tor network, which concealed the location of the operator and users, said Deputy Assistant Attorney General Richard Downing.

Child sex offenders set up online communities that "brazenly promote victimizing children and even infants, educate members about how to perpetrate abuse without getting caught, encourage members to document their abuse, and distribute those videos and pictures to groups of predators," Downing said.

Son was indicted under seal in Washington in August 2018 on child pornography and money laundering charges. Users could join the site free with a user name and password, allowing them to download videos. They earned "points" by uploading videos and referring new users. They could buy a "VIP" account that allowed unlimited downloads for six months if they exchanged Bitcoin valued at $353 in March 2018, the indictment said.

The server for the site was run out of Son's bedroom, according to the indictment.

U.S. authorities disclosed information about three dozen of the accused site users, including former federal agents and a Georgia man who videotaped children in his own bathroom and uploaded videos of them. The other site users who've been charged weren't identified. Two users took their own lives after search warrants were executed, authorities said.

Prosecutors also filed a civil forfeiture complaint to seize 24 cryptocurrency accounts of users who conspired to launder money and possess child pornography.

Investigators from the Internal Revenue Service and Homeland Security Investigations worked with law enforcement around the world, including the U.K.'s National Crime Agency. The NCA said it uncovered the Welcome to Video site while investigating a man now serving a 25-year jail term, and that it identified Son as the operator.

Agents from the IRS Criminal Investigation Division also claimed credit. Don Fort, chief of the division, said they determined the location of the Darknet server in South Korea, identified Son and found the physical location of the website. They also unmasked users hiding behind Bitcoin transactions, Fort said.

"Our agency's ability to analyze the blockchain and de-anonymize Bitcoin transactions allowed for the identification of hundreds of predators around the world," Fort said. "The scale of this crime is eye-popping and sickening."

(Updates with prosecutor's comments.)

--With assistance from Neil Weinberg.

To contact the reporter on this story: David Voreacos in federal court in Newark, New Jersey, at dvoreacos@bloomberg.net

To contact the editors responsible for this story: Jeffrey D Grocott at jgrocott2@bloomberg.net, David S. Joachim

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.

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