Client is messaging me child pornographic material - contract canceled and Freelancer gets no pay

[#1]

So I develop software for a client. He makes a dispute. He messaged on UpWork borderline child pornographic/**Edited for Community Guidelines** material.
UpWork cancels the contract. " Any outstanding contract funds will revert to the client."
So me as a freelancer I get punished and he goes free without paying me?

Seriously?

Do I see a loophole here how clients can avoid paying freelancers?

[#2]

I know at least 5 loopholes how to client able receive work for free. Upwork also know but do nothing for a long time. Why? I think you can answer yourself.

[#3]

I got a great idea ! Mykola please PM me.
What about creating a website with all loopholes (both client and freelancer) listed for anyone to see!
Yes, freelancers like me will briefly suffer, but I am pretty sure in a few days media attention to such a website will start to "roll things in to the right direction".
Basically, this is like a red team in coding. Or whistleblowers. Both should not get punished! They improve the system!
PS: I go the next client who wants me to breach the ToS of an API provider now. Its not funny anymore. If I report him at UpWork me as a whistleblower will get punished again. 😞 Not cool anymore....

[#4 · Accepted solution]

Loophole sharing lead only to one result: more and more scammers. You want to kill site faster? It is already dyinig, dont rush. 🙂

[#5]

I would like to discuss since I disagree. 

The servers our conversation now is running now are all open source. Linux.

Linux has less security issues and is the preferred solution for most servers today because the community behind it openly talks about security issues. This leads to faster vulnerability fixes.

So being open and transparent about bugs, and also loopholes is often a good way to make a system better.