Home Blockchain Feds Flag More Bitcoin, Ethereum Addresses Tied to Chinese Fentanyl Trade

Feds Flag More Bitcoin, Ethereum Addresses Tied to Chinese Fentanyl Trade

by Harry Garcia

The United States Treasury’s Office of Foreign Assets Control (OFAC) has taken action against crypto wallets linked to illegal fentanyl trade. The drug trafficking network, primarily based in China, utilized various cryptocurrencies to facilitate their operations. As a result, six entities and their digital wallet addresses, including five individuals and one company called Valerian Labs, have been added to the OFAC’s specially designated nationals (SDN) list.

According to blockchain surveillance firm Chainalysis, the addresses identified in this action collectively received around $3.8 million worth of cryptocurrency. This amount represents a significant quantity of drugs potentially trafficked into the United States and other countries. The government has now blacklisted a total of 17 wallet addresses involved in the illicit fentanyl trade. These addresses span networks like Bitcoin, Ethereum, and Tron, with transactions mainly being conducted using stablecoins.

It is worth noting that all five individuals’ wallets, along with Valerian Labs, were hosted on the same centralized crypto exchange. However, the specific exchange was not disclosed. Each wallet received funds through a series of small transfers in consistent amounts from personal wallets and other mainstream exchanges. Chainalysis interpreted this consistent payment pattern as an indication of the sale of fentanyl and associated precursor chemicals.

The global market for crypto-based fentanyl sales has been on the rise. Chainalysis previously published a report in May, revealing that China-based fentanyl sellers had received approximately $37.8 million worth of cryptocurrency since 2018. While the U.S. Treasury had already imposed sanctions on Bitcoin addresses linked to such suppliers, this recent action is the first to target Tron addresses. In a separate incident last month, OFAC also sanctioned an Ethereum address associated with a member of a Mexican money laundering network involved in transferring fentanyl proceeds.

Chainalysis believes that these sanctions against individuals and businesses connected to the drug trafficking network are an important step in preventing the exploitation of cryptocurrency by criminals. The firm sees it as a reminder of the extent of the problem and the ongoing efforts required to combat it effectively.

The OFAC’s actions demonstrate the continuous efforts by governments and regulatory bodies to address illegal activities conducted through cryptocurrencies. As the blockchain industry matures, the need for robust regulatory measures becomes increasingly evident. The collaboration between blockchain surveillance firms like Chainalysis and government authorities in identifying illicit activities can help maintain the integrity of the cryptocurrency ecosystem and protect against criminal misuse.

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