Mexican Cartels Using Cryptocurrencies To Manufacture Fentanyl, US Treasury Says
The US Treasury’s Financial Crimes and Enforcement Network (FinCEN) claims that a number of Mexican cartels are using cryptocurrencies to procure fentanyl manufacturing materials amid America’s unprecedented opioid epidemic, a June 20 advisory from the national agency revealed.
US Treasury Warns Of Drug Trafficking With Crypto Amid Opioid Epidemic
According to the latest warning from FinCEN, transnational criminal organizations (TCOs) beyond the southern border are increasingly purchasing equipment such as pill presses, die molds, precursor chemicals, and more from the People’s Republic of China (PRC) with several well-known digital tokens.
“Mexico-based TCOs are increasingly purchasing fentanyl precursor chemicals and manufacturing equipment from PRC-based suppliers in virtual currency, including bitcoin, ether, monero, and tether, among others,” the advisory states. “Virtual currency payments are often sent to persons affiliated with PRC-based suppliers or secondary money transmitters with hosted wallets at virtual asset service providers.
FinCEN’s new advisory provides updated information on the money laundering networks fueling fentanyl precursor supply chains.
— Nate Sibley (@NateSibley) June 21, 2024
According to data from John Hopkins and the Centers for Disease Control, over one million Americans have died from an overdose since the late 1990s, with that number topping over 100,000 deaths per annum in recent years.
A May survey from the private research university found that an estimated one third of all Americans know someone who lost their lives to a fatal drug overdose.
Blockchain analytics firm Elliptic found that 90% of China-based companies that supply fentanyl precursors accepted digital asset payment options, with cryptocurrency wallets belonging to the organizations seeing surging transaction rates of 450% year over year.
US Lawmakers Address Illicit Digital Asset Activity
These concerns have reached U.S. lawmakers, including Senator Elizabeth Warren (D-MA), who has long advocated for more aggressive regulations across the digital asset sector.
“Cryptocurrency has played an increasingly prominent role in the global fentanyl trade over the past decade, both in terms of facilitating the manufacturing and trafficking of fentanyl and in laundering drug cartels’ criminal proceeds, and has been recognized as a threat by administrations of both parties,” a May 2024 letter from Senator Warren and Bill Cassidy (R-LA) to the National Drug Control Policy reads.
China formally banned the export of fentanyl in 2019 after facing pressure from the U.S. government. However, the move has yet to stop illicit actors from trafficking the illegal substance into the country.
Just last October, the U.S. sanctioned eight Chinese businesses for the sale and distribution of precursor chemicals.
Whether or not blockchain-based organizations will face ramifications for their increasing role in the global drug trade remains to be seen.
