DOZENS of paedophiles in Britain have bought and sold child pornography on the internet using offshore gold trading accounts in the belief that transactions cannot be traced by the authorities.

An investigation by The Times found that E-Gold — a payment system registered on the island tax haven of Nevis — has been exploited by paedophiles for years.

Douglas Jackson, who founded the company in 1996, said it was contacted by the FBI in January after two groups in Britain were found to be trading child porn.

“We received two subpoenas . . . we immediately handed over the account information in question,” Dr Jackson said.

Several paedophile rings have been broken by authorities working with E-Gold. Dr Jackson, a former army doctor, said: “In 1999 we had the first inference of this kind of criminality and we have been proactively reaching out to the authorities ever since.”

He added that, as a father of two, the thought of paedophiles exploiting his business filled him with disgust. “We are not talking images of young-looking girls in pigtails. We are talking very young children suffering abuse. It is terrible.”

Dr Jackson says that E-Gold’s success in helping to track down illegal porn dealers and other criminals is based on the ability to trace every transaction it undertakes.

“About the dumbest choice a criminal could make would be to make use of E-Gold, imagining that their actions are anonymous or untraceable,” he said. “The only way to obtain E-Gold is if someone that has some clicks it to you, thereby creating a permanent and discoverable connection between the payer and recipient.”

Dr Jackson said that there was a record of every E-Gold account-to-account transfer.

E-Gold can be bought at dozens of websites that sell “digital gold”. It is paid for using a credit card, bank account or wire transfer. Digital gold can then be stored in an E-Gold account and be exchanged for goods or services with someone who accepts it as a form of payment.

E-Gold now has 3.46 tonnes of gold in circulation worth $65 million (£37 million). The company settles 60,000 transactions a day, worth about $10 million.

E-Gold has been working with child protection organisations in the UK to combat child pornography dealers since 2004. Britain’s National Crime Squad said: “We have had contact with the E-Gold website, who seemed sincere in their commitment to assist law enforcement. However, we await further information from E-Gold as to how it is going to address its association with child abuse images.

“We seek to work closely with any business or website exploited by the paedophile community for the purposes of trading images of child abuse.

“We are in constant contact with law enforcement authorities all over the world in relation to seeking out UK-based paedophiles who use the internet for criminal purposes. Every child matters everywhere.”

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