Is Decentralisation Making Crypto Hard to Police?

Cryptocurrency payments to suspected human trafficking services grew 85% in 2025, reaching hundreds of millions of dollars across identified services, according to the Chainalysis 2026 Crypto Crime Report. The report says the dollar amounts understate the human cost, as the real damage is measured in lives harmed rather than money transferred.

Chainalysis connects this growth to scam compounds in Southeast Asia, online gambling sites and Chinese language money laundering networks operating through Telegram. These networks form illegal networks with global reach. Unlike cash, blockchain transactions have a “visible trail”, so once investigators connect a wallet address to a real person or group, they can trace where money came from and where it moved next. Companies like Chainalysis analyse these things to find patterns in order to help law enforcement track criminal networks.

The report tracks four categories. These are Telegram based international escort services suspected of trafficking, labour placement agents tied to forced scam work, prostitution networks and child sexual abuse material vendors. Payment patterns differ across each group, with stablecoins dominant in escort and prostitution services, and bitcoin long favoured by CSAM vendors.

How Do Illegal Labour Networks Operate?

Nearly half of transactions tied to Telegram based international escort services exceed $10,000. Chainalysis says 48.8% of transfers fall above that point likely due to those organised operations working at scale. Prostitution networks are lower, with about 62% of payments between $1,000 and $10,000.

Labour placement agents connected to scam compounds also operate through Telegram. Victims are lured with fake job offers and then forced to run online scams under threat of violence.

Recruitment payments usually range from $1,000 to $10,000. Chainalysis identified an administrator account tied to the Fully Light Group, a Kokang based organisation previously flagged by the United Nations Office on Drugs and Crime for illegal gambling and money laundering.

What Is Happening In CSAM Networks?

CSAM networks have moved towards subscription models. About half of transactions are under $100, lowering the cost of entry for consumers and creating predictable monthly revenue for operators. In 2025, many networks continued to accept mainstream cryptocurrencies but increasingly used Monero to launder proceeds.

In July 2025, Chainalysis identified one of the largest dark web CSAM websites after a UK law enforcement lead. The site used more than 5,800 cryptocurrency addresses and generated over $530,000 since July 2022, exceeding the scale of the 2019 Welcome to Video case.

Chris Hughes, Hotline Director at the Internet Watch Foundation, said, “In 2025, the Internet Watch Foundation identified 312,030 reports containing child sexual abuse images and videos. This is more than ever before, with an increase of 7% from the previous year. Early analysis of IWF data indicates that most clearweb sites offering virtual currency as a payment for child sexual abuse are hosted in the US, while darkweb sites were the second highest.

“Any payment information that we identify on commercial websites is captured and shared with global law enforcement and organisations like Chainalysis to disrupt further distribution of criminal imagery and to help in the investigation of those who create, share and profit from the sale of child sexual abuse material.”

Is Decentralsation Making Crypto Hard To Police?

Oscar Asly, Group CEO, M4Markets

“Decentralisation is often blamed for making crypto difficult to police, but the reality is more nuanced. Public blockchains are transparent by design, and in many cases transactions are more traceable than cash. The bigger challenge is fragmented regulation and inconsistent enforcement across jurisdictions, which creates opportunities for criminal networks to exploit weaker environments. This is precisely why it is so important for investors and clients to work only with properly regulated, reputable financial firms that operate under strict compliance and monitoring standards.

“At M4Markets, we operate within regulated frameworks and maintain rigorous anti-money laundering, transaction monitoring and client due diligence processes, which are continually reviewed and strengthened in line with evolving global standards. The focus for policymakers should be on strengthening oversight of centralised access points such as exchanges and brokers, alongside greater international coordination. As regulation matures, the inherent transparency of blockchain technology will increasingly support law enforcement efforts rather than hinder them.”

Dmitry Machikhin, Founder & CEO, BitOK

“Front and centre is the decentralised nature of cryptocurrencies. Covering one’s tracks is extremely difficult. If an investigator has even a small lead, they can quickly reconstruct the entire scheme using blockchain analytics tools.

“As for regulation, it’s important to note that authorities in many countries are not prioritising access to advanced tools for investigating crypto-related crimes. There’s also a shortage of specialists capable of carrying out this kind of work. Many investigators operate anonymously for a number of reasons — to avoid drawing attention from law enforcement and to protect themselves from retaliation by the scammers they expose.

“Yes, U.S. authorities and several other jurisdictions are trying to cooperate with developers of analytics software, but it’s still not enough. In practice, even private investigators often outperform government-aligned analysts in both speed and effectiveness.”