The U.S. Department of Justice (DOJ) recently made a significant move in cracking down on the production and distribution of fentanyl—an extremely potent synthetic opioid. The department announced eight indictments against Chinese companies and their employees believed to be involved in these illicit activities. What’s interesting is that these companies may have utilized cryptocurrencies to manage their finances related to these operations.
In a parallel action, the U.S. Treasury’s Office of Foreign Assets Control (OFAC) imposed sanctions on several individuals and entities associated with these illegal activities. Additionally, the OFAC identified 16 crypto wallets connected to the indicted parties.
Among the entities flagged by the OFAC were Hanhong Pharmaceutical Technology, Hebei Crovell Biotech, and various individuals holding cryptocurrencies such as Bitcoin, Ethereum, USD Coin, Tether, and Tron. These individuals allegedly used their crypto assets for suspected unlawful activities.
As part of the press conference, Treasury Deputy Secretary Wally Adeyemo remarked, “We have identified and blocked over a dozen virtual currency wallets associated with these actors… The blocked wallets, which received millions of USD funds over hundreds of deposits, illustrate the scope and scale of the operation targeted today.”
While cryptocurrencies being tied to criminal drug trade is not a new phenomenon, it continues to be a cause for concern. The recurring association between cryptocurrencies and illegal activities has prompted politicians to call for stronger regulations within the industry.
Last year, U.S. Senator Elizabeth Warren raised concerns about the use of crypto in funding the fentanyl trade. During a hearing at the Senate Banking Committee, she expressed her worries by stating, “This group sold enough precursor drugs in exchange for crypto to produce $540 billion worth of fentanyl pills. That is enough fentanyl to kill nearly 9 billion people, all paid for by crypto.” These figures are alarming, considering fentanyl was responsible for over 67,000 deaths in the United States alone last year.
The Justice Department highlights the lethal nature of fentanyl, with a mere two-milligram dose capable of killing a grown adult. The rise in the use of cryptocurrencies within the drug trade only adds further urgency to the need for stricter regulations in the virtual currency industry. It is crucial to safeguard against its misuse and ensure that digital assets are not facilitating illicit activities, particularly those that have devastating consequences like the fentanyl crisis.