(potentially NSFW) Does chatroulette want a lawsuit?

I just found out about this site called chatroulette. It’s a site where people can chat through webcam, sound, and IM, but by clicking Next, you chat with someone else picked at random.

They have this “agreement” that says:
1.You have to be at least 16 years old to use our service
2.Chatroulette does not tolerate broadcasting obscene, offending, pornographic material and and we will have to block users who violate these rules from using our service.
3.Please use “Report inappropriate video” link to notify us about inappropriate content and we will take necessary steps.
4.Everything supplied by the user you are connected with is not property of Chatroulette, and therefore Chatroulette is not responsible for what you will find.
5.By using Chatroulette you agree to our Terms of Service.
6.Enjoy our service ;)

But when I went on, 50% of the videos were of men masturbating! A lot of the other users were minors.
This seems like a pedophile’s dream.
What do you think about this site?
Is this legal?