US Charges Dutch National With Running Crypto-Funded Child Porn Site

U.S. prosecutors indicated a Dutch national Thursday for allegedly spearheading a rape and child pornography website that’s made over $1.6 million worth of bitcoin selling videos since 2012.

Known as “Michael R.M.,” and “Mr. Dark,” the man allegedly ran a site called “DarkScandals” that operated on the darknet, which requires special software to access, and on the public clearnet. He allegedly sold over 2,000 videos and had ties to 303 virtual currency accounts, according to a press release from the U.S. Attorney’s Office for the District of Columbia.

Bitcoin BTC$92,457.12 and ether ETH$3,157.07 funded the bulk of the operation, according to the complaint against the man filed in the U.S. District Court for the District of Columbia. Customers allegedly sent the cryptocurrencies as payment for videos or could upload their own. Their video submissions had to follow “specific rules,” though. As detailed extensively in the complaint, the videos had to be explicitly “obscene.”

“The types of crimes described in this indictment are the most disgusting I’ve encountered in 30 years of law enforcement,” said Don Fort, chief of the Internal Revenue Service’s Criminal Investigation team (IRS-CI), in a press release. “It is a special kind of evil to prey on and profit from the pain of others.”

Federal agents discovered DarkScandals while investigating the Welcome to Video case last year. That operation led to hundreds of arrests, the seizure of hundreds of thousands of videos and the dismantling of what was deemed the “largest darknet child pornography website” by investigators at the time.

It also led investigators straight to DarkScandals, the complaint said. “A subsequent review of a Washington, D.C.-based 'Welcome to Video' customer’s virtual currency records lead to the discovery of the DarkScandals sites.”

The case serves as another reminder that cryptocurrencies are a double-edged sword for criminals. On the one hand, transactions cannot be blocked by a regulated third party like a bank or payment processor; on the other hand, they leave a trail of crumbs for investigators that is difficult to obscure.

Agents with IRS and Homeland Security Investigations traced 303 digital currency transactions in the course of this latest investigation. The IRS had used Chainalysis’ transaction tracing software in the Welcome to Video investigation, but a spokesperson for Chainalysis declined to comment on this most recent one.

“If you thought you were anonymous, think again,” Fort said.

U.S. investigators worked in partnership with the Dutch National Police, Europol and the German Federal Criminal Police in parallel investigations, according to DOJ.

Prosecutors are seeking to charge the man on nine counts and seize the operation’s digital currency holdings. It was not immediately clear if he is in custody. A spokesperson for the U.S Attorney's office did not immediately respond to a request for comment.