How crypto helped users buy horrific child abuse images on Dark Scandals, whose founder was sentenced to 10 years by a Dutch court, often aided by exchanges
Reuters : Tweets: @aaberwick , @to_discussion , @reuters , @reutersbiz , @reuters , and @reuters Tweets: Angus Berwick / @aaberwick : Crypto's defenders say the blockchain offers “unparalleled transparency” into illicit flows. But exchanges' often lax controls enable criminals to still move funds without detection. We researched one criminal group that exploited this gap: child abusers https://www.reuters.com/... @to_discussion : I think the most disturbing part of this is that this man got less than a year in prison per child he violently harmed. Our children deserve better protection than this. https://www.reuters.com/... @reuters : The owner of a website selling horrific child-abuse images turned to Bitcoin after PayPal blocked the newly launched Dark Scandals from its payment network. He made the equivalent of more than 100,000 euros, enabled by crypto exchanges https://www.reuters.com/... via @specialreports https://twitter.com/... @reutersbiz : Clients of ‘darknet’ site Dark Scandals used crypto exchanges Coinbase and LocalBitcoins to move tokens worth $22,000 from 2013 to 2019, blockchain data reviewed by @Reuters shows https://www.reuters.com/... @AABerwick @tomwilson1983 via @specialreports https://twitter.com/... @reuters : Stating ‘We love anonymity’ on Dark Scandals' homepage, Michael Mohammad used crypto to build the site into one of the largest known marketplaces for illegal sexual imagery of children https://www.reuters.com/... @AABerwick @tomwilson1983 via @specialreports https://twitter.com/... @reuters : In the eight years he ran an online market selling images of violent child sexual abuse, Michael Mohammad made the equivalent of more than 100,000 euros. A new breed of company enabled his business: cryptocurrency exchanges https://www.reuters.com/... @AABerwick @tomwilson1983 https://twitter.com/...
Context & Ripple Effects
A Dutch court has sentenced Michael Mohammad to 10 years for running Dark Scandals, a marketplace that sold violent child sexual abuse images for more than 100,000 euros over eight years. The Reuters investigation behind the sentencing traces the money: PayPal blocked the site from its network, so Mohammad turned to Bitcoin, and clients moved roughly $22,000 through Coinbase and LocalBitcoins between 2013 and 2019.
The story lands in a documented arc: law enforcement has already shown bitcoin is traceable when investigators used Chainalysis tools to take down the largest child abuse site (the Welcome to Video operation), while criminals have simultaneously shifted cash-outs to unlicensed exchanges and OTC brokers. Dark Scandals shows both halves at once — mainstream venues carried the funds even as the site operated.
First-order effects
- Coinbase and LocalBitcoins are now publicly named as conduits for Dark Scandals payments, putting their customer-screening and transaction-monitoring controls directly under regulatory and press scrutiny.
- PayPal's earlier block of Dark Scandals stands as the case study in what worked: cutting off conventional payment rails forced the marketplace onto crypto, where detection lagged for years.
Second-order effects
- Exchanges face pressure to harden onboarding and flow-of-funds checks or risk being cast in the same role as the offshore processors — the Cryptomus investigation showed how quickly a payment processor becomes infrastructure for criminal sites once oversight is thin.
- Crypto forensic firms gain a stronger commercial argument: if even a small marketplace's flows were traceable post hoc, exchanges can justify buying chain-analytics tooling rather than absorb enforcement penalties.
Third-order effects
- The pattern — regulated platforms blocking, illicit demand migrating to loosely controlled crypto rails, forensics catching up years later — pushes toward mandatory, standardized exchange monitoring rather than voluntary compliance, narrowing the space where 'unparalleled transparency' coexists with undetected flows.
The trend: Illicit marketplaces are migrating from blocked traditional payment networks to crypto rails with uneven controls, making exchange-level monitoring and blockchain forensics the decisive battleground for cutting off their funding.