The United States Treasury’s Office of Foreign Assets Control (OFAC) has taken action against cryptocurrency wallets involved in the illegal fentanyl trade. The OFAC recently added a group of crypto wallets to its specially designated nationals (SDN) list, focusing on a drug trafficking network primarily based in China.
Sanctioned Wallets
The wallets in question were connected to six entities, including five individuals and one company called Valerian Labs. These wallets were instrumental in facilitating their illicit operations. In total, 17 wallet addresses were flagged by the government, spanning Bitcoin (BTC), Ethereum, and Tron networks.
Most of the illicit transactions on Ethereum (ETH) and TRON (TRX) networks involved stablecoins, which are cryptocurrency tokens backed by price-stable fiat currencies like the U.S. dollar.
The individuals’ wallets, excluding Valerian Labs, were hosted on a centralized crypto exchange, through which they received hundreds of thousands of dollars’ worth of cryptocurrency. The specific exchange involved was not disclosed.
“These addresses collectively received nearly $3.8 million worth of cryptocurrency, potentially representing significant amounts of drugs trafficked into the United States and other countries.” – Chainalysis
Through an investigation carried out by blockchain surveillance firm Chainalysis, it was revealed that these wallets received funds through a series of small transfers from personal wallets and mainstream exchanges. The consistent pattern of payments indicates the sale of specific goods, such as fentanyl and associated precursor chemicals.
The global sales of fentanyl through cryptocurrency have been on the rise. A recent report by Chainalysis highlighted that China-based fentanyl sellers have received approximately $37.8 million worth of cryptocurrency since 2018.
Expanding Sanctions
The recent move by the U.S. Treasury is notable as it marks the first time addresses on the Tron blockchain have been targeted. Last month, OFAC also sanctioned an Ethereum address connected to a member of a Mexican money laundering network, who allegedly used crypto to transfer fentanyl proceeds across the border.
Senator Elizabeth Warren has long been critical of cryptocurrency’s role in fentanyl drug transactions and has proposed legislation to combat money laundering within the digital asset space.
“Crypto is helping fund the fentanyl trade. And we have the power to shut that down. It’s time.” – Senator Elizabeth Warren
Fentanyl is a strong synthetic opioid pain reliever prescribed for severe pain, especially among cancer patients. However, it is also produced and used illegally as a recreational drug due to its potent effects.
The crackdown on cryptocurrency wallets associated with the fentanyl trade is a significant step towards curbing the illegal activities funded by digital assets. By identifying and sanctioning these wallets, authorities aim to disrupt the flow of funds that enable the drug trade.
