U.S. Sanctions Spotlight Crypto’s Position in Drug Trafficking Community

• On October 3, 2023, the U.S. Treasury’s Workplace of Overseas Belongings Management (OFAC) imposed sanctions.
• These sanctions focused people and firms concerned in manufacturing and distributing harmful medicine, together with fentanyl and precursor chemical substances.
• Notably, the sanctions additionally prolonged to cryptocurrency addresses related to the sanctioned entities.

The U.S. Treasury’s Workplace of Overseas Belongings Management (OFAC) introduced sanctions on October 3, 2023. The sanctions focused a number of people and firms concerned within the manufacturing and distribution of harmful medicine, together with fentanyl and precursor chemical substances. Notably, these sanctions additionally prolonged to cryptocurrency addresses related to the sanctioned entities.

Blockchain analytics agency Chainalysis printed a report analyzing cryptocurrency exercise associated to latest US sanctions in opposition to a China-based drug trafficking community.

The entities on the middle of the OFAC’s motion kind a sprawling drug trafficking community, based mostly in China and involving one Canadian nationwide and two Canadian companies underneath their possession.

In line with the report, one placing facet of this OFAC motion is the connection between cryptocurrency and the drug commerce. The cryptocurrency addresses related to the sanctioned people and firms spanned the Bitcoin, Ethereum, and Tron blockchains. Notably, addresses on Ethereum and Tron primarily acquired stablecoins like USDT and USDC, aligning with the pattern of utilizing stablecoins for illicit transactions.

Apart from addresses linked to a Valerian Labs, a Canadian firm that describes itself as a  “manufacturing facility that manufactures and bottles all forms of drinks”, all of those addresses had been hosted on a mainstream change referred to right here as “Core Change.” Funds flowed into these addresses from each private wallets and different mainstream exchanges, primarily six totally different ones.

In line with the report, every of the 5 people acquired substantial sums of cryptocurrency, sometimes in constant quantities. This sample strongly suggests the sale of particular items, on this case, fentanyl and its precursor chemical substances.

For example, a detailed examination of deposit addresses related to Shen Xianbiao, one of many sanctioned people and a part-owner of Jinhu Minsheng Pharmaceutical Equipment, revealed that the majority transactions from private wallets fell inside the slim vary of $5,000 to $5,500 price of cryptocurrency.

Moreover, these addresses acquired substantial quantities from darknet markets, indicating that they might symbolize distributors buying medicine or precursor chemical substances from these labs for subsequent resale.