U.S. authorities took action against several China-based companies and individuals implicated in the fentanyl trade on Oct. 3.
The Department of Justice (DOJ) announced that it has unsealed eight indictments on crimes related to the production of fentanyl and methamphetamine, the distribution of synthetic opioids, and sales related to precursor chemicals.
Though participants used a variety of payment methods, the DOJ said that those involved in the crimes incorporated cryptocurrency into their cash flows. It noted that crypto transactions allowed participants to conceal their identities and obscure money trails.
The agency specifically stated that two individuals linked to Hebei Shenghao Import and Export Company — Qingsong Li and Chunhui Chen — held crypto wallets for remittances related to precursor chemicals used in drug production.
The DOJ said that another individual, Wei Zhang, acted in connection with Hubei Guanlang Biotechnology Company. Zhang is alleged to have operated a crypto wallet that facilitated transactions for sales of fentanyl precursors and opioid additives.
New Treasury sanctions
A separate statement from the Treasury’s Office of Foreign Assets Control (OFAC) imposed sanctions on various parties involved in drug transactions.
The sanctions list restricts a total of 19 cryptocurrency addresses including wallets holding Bitcoin (BTC), Ethereum (ETH), Tether (USDT), and Tron (TRX).
Though the Treasury’s sanctions target 28 companies and individuals, the majority of the above crypto addresses belong to just five individuals, who are in turn connected to companies involved in the fentanyl and drug trade. Four of those crypto addresses also belong to a company in Vancouver, Canada called Valerian Labs.
Additionally, the Treasury imposed sanctions on Du Changgen, identified as the leader of the criminal drug syndicate. It stated that Changgen has personally received cryptocurrency but did not include any crypto addresses belonging to Changgen in the sanctions lists.
There have been several recent developments concerning the use of cryptocurrency in the fentanyl trade. The DOJ noted that it took other action against Chinese fentanyl companies in June; some of those entities also utilized crypto payments.
Outside of law enforcement, the blockchain analysis firm Elliptic highlighted the issue in May 2023, leading U.S. Senator Elizabeth Warren to call for action later that month.
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