The US Department of Justice (DoJ) has slammed the brakes on a fentanyl supply chain involving 28 Chinese entities. According to the DoJ’s findings, companies and employees trafficked fentanyl, an opioid more powerful than morphine and heroin, with cryptocurrencies.
Two Chinese nationals, Qingsong Li and Chunhui Chen, allegedly maintained crypto wallets receiving overseas payments for raw materials supplied by Hebei Shenghao Import. Yongle Gao, also a Chinese citizen, allegedly owns a Bitcoin wallet linked to Henan Ruijiu Biotechnology Company, another supplier.
Chinese Fentanyl Companies Received Crypto
Xiamen Wonderful Biotechnology Company, a chemical company based in Fujian Province, purportedly received funds in a wallet owned by a 34-year-old Chinese national, Guo Liang. Du Transnational Criminal Organization and a reputed sales representative, Gan, allegedly intended to import substances paid for in cryptocurrencies unlawfully.
The DoJ charged several companies with international money laundering and flagrant disregard for US Customs. The defendants allegedly used fake shipping labels and fraudulent documents to move illegal substances.
The DoJ charges follow the designation of the 28 individuals and entities as international drug traffickers by the Office of Foreign Assets Control (OFAC).
How Drug Scams Using Crypto Evolved
Following the indictments against Alex Adrianus Martinus Peijnenburgm, Martinus Pterus Henri De Koning, and Englishman Matthew Simon Grimm for trafficking fentanyl with crypto, the US Treasury vowed to crack down on the abuse of digital currencies for crime.
The open nature of blockchains simplifies the tracking of illicit fund flows if investigators know a criminal’s crypto address. Banks and other institutions can notify authorities and block transactions involving entities subject to US Treasury sanctions.
Read more: How to Use a Blockchain Explorer to Look Up Transactions
However, criminals have grown more sophisticated since the era of Silk Road, where people disguised IP addresses using the Tor routing protocol. One of the tools criminals favor is TornadoCash, an Ethereum application that criminals use to obscure the link between the source and destination of cryptocurrency transactions.
In November, the US Treasury Department sanctioned Tornado Cash, causing an outcry from free speech advocates.
Read more: Top 7 Tornado Cash Alternatives in 2023
Earlier, US and German authorities shut down Hydra, a Russian marketplace known for brokering illicit drug transactions. Instead of using a mixer, Hydra set up a sequence of services converting crypto to rubles to obscure fund flows.
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