U.S. Justice Department charges eight Chinese companies with using cryptocurrency to facilitate fentanyl trade

The U.S. Treasury Department also sanctioned several participants and their cryptocurrency addresses in connection with the allegations.

On October 3, U.S. authorities took action against several Chinese companies and individuals suspected of fentanyl trade.

The U.S. Department of Justice (DOJ) announced that it has filed eight indictments for crimes related to the production of fentanyl and methamphetamine, the distribution of synthetic opioids, and the sale of precursor chemicals.

The DOJ said those involved in the crimes incorporated cryptocurrencies into their cash flow, although they used a variety of payment methods. It noted that crypto trading allows participants to hide their identities and cover the trail of funds.

The agency specifically noted that two individuals linked to Hebei Shenghao Import and Export Company, Li Qingsong and Chen Chunhui, held encrypted wallets used for remittances related to precursor chemicals used in drug production.

The U.S. Department of Justice said the actions of another individual, Zhang Wei, were related to Hubei Guanlang Biotechnology Company. Zhang is accused of operating a crypto wallet that facilitated the sale of fentanyl precursors and opioid additives.

New Treasury Sanctions

A separate statement from the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) imposed sanctions on parties involved in the drug trade.

The sanctions list restricts a total of 19 cryptocurrency addresses, including wallets holding Bitcoin (BTC), Ethereum (ETH), Tether (USDT), and Tron (TRX).

Although the Treasury Department's sanctions targeted 28 companies and individuals, most of the above-mentioned encryption addresses belong to only five individuals, who in turn are associated with companies involved in the fentanyl and drug trade. Four of the crypto addresses also belong to a company called Valerian Labs in Vancouver, Canada.

In addition, the Ministry of Finance also imposed sanctions on drug cartel leader Du Changgen. It said Changgen personally received the cryptocurrency, but the sanctions list did not include any crypto addresses belonging to Changgen.

Latest developments regarding the use of cryptocurrencies in the fentanyl trade. The U.S. Department of Justice noted that it took other actions against Chinese fentanyl companies in June; some of the entities also used cryptocurrency for payments.

Outside of law enforcement, blockchain analytics firm Elliptic highlighted the issue in May 2023, leading U.S. Senator Elizabeth Warren to call for action later that month.