The tools used to create the images remain legal in the UK, the Internet Watch Foundation says, even though AI child sexual abuse images are illegal.
The girl sent a photo to a boy in her class before the image and her phone number were added to all-male online chat groups - she later started disappearing before being abused by "unknown men".
Sextortion is a form of blackmail in which a child is tricked into sending sexual images of themselves to abusers, who then threaten to share the pictures with friends, family or more widely on the internet if they are not paid money.
The Internet Watch Foundation (IWF) warns of a "shocking" rise of primary school children being coerced into performing sexually online.
The images that Nelson made have been linked back to real children around the world. In some cases, he then went on to encourage his clients to rape and sexually assault the youngsters.
The government says it is leading the way with its crackdown on AI-generated abuse images, after warnings the content was being produced at a "chilling" rate.
Groups including the IWF, NSPCC, Barnardo's and The Children's Society wrote to Yvette Cooper to say that violence against women and girls and child sexual abuse are "inherently and deeply connected".
Child safety organisations have welcomed the governments inclusion of child abuse victims in its violence against women and girls strategy.
Child sexual abuse is on the rise online and the predators behind it have a new business model that's hiding in plain sight.
A leading children's charity is calling on Prime Minister Rishi Sunak to tackle AI-generated child sexual abuse imagery, when the UK hosts the first global summit on AI safety this autumn.
In a review of material posted on the dark web, the Internet Watch Foundation found that deepfakes featuring children were becoming more extreme.
Sexual predators are grooming children under six into performing “disturbing” acts of sexual abuse via phones or webcams a charity has warned.