The U.S Treasury’s Office of Foreign Assets Control (OFAC)OFAC has raised the hammer on several cryptocurrency wallets alleged to be tethered to the illicit trade of fentanyl, an opioid significantly more potent than Morphine. Adding a new set of wallets to its specially designated nationals (SDN) list, OFAC pointed its lens towards a primarily China-based drug trafficking network comprising five individuals and one enterprise, namely Valerian Labs.
Three major blockchain networks, namely Bitcoin, Ethereum, and Tron, surfaced in the investigation, encapsulating 17 wallet addresses. The startling discovery revealed that most transactions on Ethereum and Tron networks were carried out via Stablecoins – cryptocurrency tokens backed by price-stable fiat currencies. The critical twist, however, is that all the accused, barring Valerian Labs, had their wallets hosted on a centralized crypto exchange, a significant loophole that allowed the illicit flow of hundreds of thousands of dollars worth of cryptocurrency.
While the specific crypto exchange remains undisclosed, blockchain surveillance firm Chainalysis gives a rough estimate of nearly $3.8 million worth of cryptocurrency flowing through these addresses. This points towards significant drug trafficking into the United States and other nations.
The intricate web of these alleged operations also involved one Canadian national and two Canadian businesses. Chainalysis’ investigation reveals consistent small transfers, potentially indicative of the sale of specific goods, primarily fentanyl and related precursor chemicals, originating from personal wallets and various exchanges. With China-based fentanyl vendors receiving approximately $37.8 million worth of cryptocurrency since 2018, the worrying trend of globally escalating crypto-based fentanyl sales has become evident.
Last month’s OFAC sanctions included an Ethereum address associated with a member of a Mexican money laundering group, accused of using cryptocurrency for the cross-border transfer of fentanyl proceeds. Interestingly, this is the first instance of OFAC targeting addresses on the Tron blockchain.
Meanwhile , US Senator Elizabeth Warren has been vocal about tightening the legislation in response to the growing problem of fentanyl crypto payments. Calling for the implementation of her bill, the Digital Asset Anti-Money Laundering Act, Warren aims to patch up exploits in Anti-money laundering protocols and sever the drug suppliers’ crypto lifeline.
While cryptocurrency broadens access to the global economy, caution should be practiced as illicit activities, like the fentanyl trade, benefit from these platforms. Hence, placing regulatory checks in motion becomes absolutely crucial. On one side, it supports secure and legal economic interaction. On the other, it prevents the misuse of the crypto world for illegal profiteering, maintaining the equilibrium of this powerful yet sensitive economic ecosystem.
Source: Cryptonews
