Bitcoin And Ethereum Used For Drug Trade Transactions

Digital assets BTC and ETH are used for drug transactions. (Photo; Doc. Bitcoin News)

JAKARTA - The United States (US) government has taken firm steps to crack down on fentanyl trading involving several Chinese companies and individuals.

On October 3, the US Department of Justice (DOJ) announced eight charges related to fentanyl production, methamphetamine, and the distribution of synthetic opioids, which also involve cryptocurrencies in its financial flows.

In the announcement, DOJ noted that criminals used various payment methods, including cryptocurrencies, to disguise their identities and eliminate traces of transactions. Cryptocurrencies allow them to make transactions without revealing their identities.

DOJ also specifically appointed two individuals related to the Hebei Shenghao Import and Export Company, namely Qingsong Li and Chunhui Chen. These two individuals use crypto wallets to send money related to precursor chemicals used in the production of drugs.

In addition, Wei Zhang, who is involved with the Biotechnology Company Hubei Guanlang, is also suspected of using crypto wallets to conduct fentanyl precursors and opioidal additive substances.

Sanctions From The US Treasury Department

In addition to legal action by DOJ, the US Treasury Department's Office of Foreign Asset Control (OFAC) imposed sanctions on a number of parties involved in drug transactions. These sanctions include 19 cryptocurrency addresses, including Bitcoin (BTC), Ethereum (ETH), Tether (USDT), and Tron (TRX).

Although these sanctions are aimed at 28 companies and individuals, most of the crypto addresses are owned only by five individuals linked to companies involved in fentanyl and drug trading. Four of these crypto addresses are also linked to the Valerian Labs company in Vancouver, Canada.

The leader of a drug syndicate, Du Changgen, is also subject to sanctions by the US Treasury Department. Although Changgen receives cryptocurrencies personally, its personal crypto addresses are not included in the sanctions list.

This legal action is a continuation of US law enforcement efforts against Chinese fentanyl companies in June, which also recorded the use of cryptocurrencies in transactions. In response to this, blockchain analysis firm Elliptic identified the matter in May 2023, which then caught the attention of US Senator Elizabeth Warren.

The US government continues to strengthen their efforts to tackle drug trafficking involving cryptocurrencies, in hopes of reducing the use of cryptocurrencies in criminal activity.