Many leading P2P and payment apps including Cash App, Venmo, Apple Pay, Revolut and Zelle permit accounts for children ages 13 and up with a parent or guardian“ sponsoring” the account.
When teens do not have P2P or payment app accounts, perpetrators often then demand payment in gift cards. Teens can purchase gift cards with cash at physical retailers or online including iTunes and Xbox gift cards. Gaming platform gift cards such as Steam and Razer are also frequently demanded by extorters. Similarly, valuable gaming currencies including Robux, V-Bucks, and Minecoins that teenage victims may already own have been demanded. Gaming currency can be resold on secondary markets.
Finally, perpetrators regularly demand children pay sextortion ransom with cryptocurrency. Some cryptocurrency exchanges allow adult-sponsored teen accounts. In addition, some Bitcoin kiosks / ATMs, crypto P2P platforms and offshore cryptocurrency exchanges do not have robust know your customer policies, which may allow a teenager to use the platform.
2. Consolidate and launder
TCOs victimize tens of thousands of kids through financially motivated sextortion, which results in large dollar amounts of illicit proceeds spread among a variety of financial institutions( FIs) and accounts. Indictments alleging financial sextortion of minors have all claimed U. S.-based money mules assisted the TCOs in consolidating and laundering illicit funds. 12
The indictment excerpt below( Table 1) succinctly explains the role of alleged complicit money mules and professional money launderers in the financial sextortion of minors: 13
Samuel and Samson Ogoshi both pleaded guilty and were sentenced to 17 years in prison. Johnathan Demetrius Green and the four other individuals have pleaded guilty to conspiring to launder funds.
Table 1: USA vs. Johnathan Demetrius Green, et al.
The object of the conspiracy was to enrich participants by laundering fraud proceeds.
Manner and Means
1. Victims of the sextortion scheme were instructed to send money to defendants’ financial accounts through various cash applications, such as Apple Pay, Cash App, Zelle and others.
2. Defendants kept a portion of the victims’ funds, typically 20 %, and converted the rest into Bitcoin.
3. Defendants then sent the Bitcoin to an unindicted Nigerian co-conspirator, who they referred to as the Plug. The Plug kept a portion of the Bitcoin funds and sent the remainder to Samuel Ogoshi, Samson Ogoshi, Ezekiel Robert and other sextortionists.
4. The laundered transactions include but are not limited to the following. On or about March 25, 2022, Victim 1 sent $ 300 via Apple Pay to Green. Green transferred a portion of those Apple Pay funds into Cash App funds. Using those Cash App funds, Green purchased Bitcoin, which he sent to the Plug. The Plug kept a portion of the funds and sent the remainder to the sextortionists.
3. International money laundering
The leaders of the TCOs running sextortion schemes are typically located overseas. Therefore, the sextortion ransom proceeds paid by U. S. teen victims must be moved across international borders to line the leaders’ pockets.
The methods used to remit sextortion proceeds across international borders are largely dependent on where the scheme originates. 15
Nigeria-based TCOs
Nigerian criminal organizations convert fiat victim ransom payments into cryptocurrency. Conspirators purchase Bitcoin at regulated exchanges then transfer it first to unhosted wallets, then after several hops, to crypto exchanges operating in Nigeria. Once in Nigeria, the Bitcoin was usually sold for local fiat currency using P2P crypto transactions.
Nigeria-based criminal groups rely on professional money launderers for the international remittance piece. Professional money launderers( PMLs) typically receive 20 % of the funds laundered as payment. Notably, the cryptocurrency wallets used by the PMLs received illicit funds from a variety of schemes including business email compromise and tech support and romance scams.
Ivory Coast TCOs
The Ivory Coast does not have a robust cryptocurrency marketplace. Instead, a variety of other means are used to remit sextortion proceeds to the Ivory Coast. These include exporting goods purchased with ransomed funds and / or gift cards, converting ransom to cash and delivering cash in person to licensed money transfer locations for remittance and cash-based hawala transactions.
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