Cointime

Cointime

Download App
iOS & Android

Chinese Chemical Businesses, Latin American Drug Cartel Associates Charged and Sanctioned for Bitcoin-based Sale of Fentanyl Precursors

Validated Project

On April 14, 2023, the Office of Foreign Assets Control (OFAC) sanctioned individuals and entities in China and Latin America for their role in fentanyl manufacturing and trafficking. One OFAC designation includes a Bitcoin address used to accept funds for the sale of fentanyl precursor chemicals made in China. The Department of Justice (DOJ) also charged several individuals associated with this operation, following an investigation by the DEA.

In this blog, we’ll briefly review the details of these sanctions and how Bitcoin played a role in relevant transactions.

Who was charged and sanctioned?

Among the entities sanctioned are two Chinese chemical companies: Wuhan Shuokang Biological Technology (WSBT) and Suzhou Xiaoli Pharmatech (SXPC). Four Chinese nationals associated with WSBT were also charged and sanctioned:

  • Yao Huatao 
  • Wu Yaqin 
  • Wu Yonghao 
  • Wang Hongfei 

As we’ll explore more below, Wang Hongfei’s entry on OFAC’s SDN list includes a Bitcoin address under his control, which was used to accept funds for fentanyl precursor chemicals the WSBT sold.

These companies stand accused of selling fentanyl precursor chemicals to Latin America-based brokers, who then sell them to drug cartels like the notorious Sinaloa Cartel based in Mexico. Some of those brokers and other cartel associates were charged by the DOJ as part of this operation. One such broker is Guatemalan national Ana Gabriela Rubio Zea, who was also sanctioned.

Bitcoin’s role

Both WSBT and SXPC accepted Bitcoin for the sale of fentanyl precursor chemicals. WSBT associate Wang Hongfei controlled at least one Bitcoin address used for this activity, which was included in his OFAC SDN list entry: 3PKiHs4GY4rFg8dpppNVPXGPqMX6K2cBML.

This address is a deposit address hosted by a large cryptocurrency exchange. Since becoming active in Dec 2021, it has received approximately $366,000 in Bitcoin, both from other mainstream exchanges and from the now-defunct darknet market Hydra. The following Chainalysis Reactor graph illustrates some of these transactions:

Analyses of Hongfei’s Bitcoin address, its activity, and the activity of other associated addresses provide opportunities to better understand the crypto nexus between Mexican drug cartels and their chemical suppliers in China.

Monitoring cryptocurrency-based fentanyl sales

Fentanyl imports into the United States continue to fuel the opioids crisis, which has caused untold harm. The law enforcement action on April 14 is an important step in reducing these drug-based activities. At Chainalysis, we commend the OFAC, DOJ, and DEA for their work, and will provide more research on the role of cryptocurrency in fentanyl trafficking in the near future.

This material is for informational purposes only, and is not intended to provide legal, tax, financial, or investment advice. Recipients should consult their own advisors before making these types of decisions. Chainalysis has no responsibility or liability for any decision made or any other acts or omissions in connection with Recipient’s use of this material.

Chainalysis does not guarantee or warrant the accuracy, completeness, timeliness, suitability or validity of the information in this report and will not be responsible for any claim attributable to errors, omissions, or other inaccuracies of any part of such material.

Read more: https://blog.chainalysis.com/reports/fentanyl-precursor-china-sanctions/

Bitcoin Bitcoin $81,805.29
-1.88%
Bitcoin China
Comments

All Comments

Recommended for you

  • US Spot Ethereum ETF Sees Net Inflow of $14.98 Million Yesterday

    On October 22, according to monitoring by Trader T, the US spot Ethereum ETF recorded a net inflow of $14.98 million yesterday.

  • Sonic to Transfer 13 Million S Tokens via Strategic OTC Agreement in Next 24 to 48 Hours

    On October 22, Sonic announced on the X platform that approximately 13 million S tokens will be transferred in the next 24 to 48 hours under a strategic over-the-counter (OTC) agreement. The counterparty is a long-term partner of Sonic, and both parties will collaborate to expand Sonic's reach and enhance user engagement through the partner's network.

  • Bank of Korea Maintains Interest Rate as Expected

    On October 22, the Bank of Korea kept the policy interest rate unchanged at 3%, in line with market expectations. Previously, South Korea raised interest rates in consecutive meetings in July and August.

  • U.S. Treasury Secretary Becerra: GENIUS Act Establishes Federal Regulatory Framework for Stablecoin Payments

    U.S. Treasury Secretary Scott Becerra stated that the GENIUS Act is a milestone in the American financial sector, further solidifying the U.S. position as a global cryptocurrency hub. He compared the bill to the National Currency Act signed by President Lincoln in 1863, asserting that it establishes a federal regulatory framework for stablecoin payments in the digital age. Becerra also mentioned that the final rules issued by the Office of the Comptroller of the Currency (OCC) will facilitate the implementation of the bill, providing a clear and pragmatic institutional foundation for private sector innovation, market competition, and maintaining U.S. leadership in the digital asset space.

  • Kalshi to Support Crypto Asset-Backed Loans for Perpetual Futures Margin

    Prediction market platform Kalshi has reached a new arrangement with crypto asset custodian BitGo, allowing certain clients to use their custodial crypto assets as collateral for loans, which will be used for margin in leveraged perpetual futures trading on the Kalshi exchange. This arrangement is aimed at clients of Kalshi Prime, a futures commission merchant registered in the U.S. It employs a tri-party collateral management structure. Loans will be provided by its affiliated lending company, Kalshi Katalyst, with collateral assets held at BitGo Bank & Trust. Eligible collateral assets include Bitcoin, Ethereum, and stablecoins deemed compliant with the GENIUS Act, with plans to integrate additional custodians in the future.

  • Serious Security Vulnerability Discovered in PHP, Leading to Mass Shutdown of Government Websites in Europe

    On October 21, due to the discovery of serious security vulnerabilities in the widely used PHP programming language, multiple government websites across Europe and other regions were forced offline on Wednesday, prompting website operators to take urgent measures to protect system security. The PHP development team announced on Tuesday that two severe security flaws had been identified and urged users to update immediately after the release of the fix. On Wednesday, the PHP team confirmed that a new version addressing the vulnerabilities had been officially released. However, reports indicated that hackers were exploiting these vulnerabilities to breach websites, leading government agencies in countries such as the Netherlands and Finland to proactively shut down some sites before the patch was made available. PHP is one of the most widely used programming languages on the internet, supporting website platforms such as WordPress, Drupal, Joomla, and Magento. According to website technology statistics agency W3Techs, approximately 75% of websites that can identify their programming language use PHP. About 43% of websites globally are powered by WordPress, covering blogs, small business sites, government portals, e-commerce platforms, and news websites. This security incident has resulted in widespread disruptions to websites across multiple European countries, including the Port of Rotterdam, the government portal Overheid.nl, the Royal Netherlands Football Association, the websites of the country's five major political parties, and several hospital websites, all of which have been temporarily shut down.

  • US Stock Indices Open Slightly Higher; SpaceX Soars 8% After Earnings

    The three major US stock indices opened slightly higher, with the Dow Jones Industrial Average up 0.20%, the S&P 500 up 0.29%, and the Nasdaq Composite up 0.71%. SpaceX opened 8% higher, reporting third-quarter revenue of $14.6 billion, a year-on-year increase of 161%. Elon Musk stated that the annual recurring revenue (ARR) is expected to reach between $500 billion and $1 trillion by the end of 2027. Among other popular stocks, Nvidia rose 2.15%, Apple increased 0.09%, Google (Class A) fell 1.28%, Microsoft decreased 0.56%, Amazon was up 0.01%, TSMC rose 1.95%, SpaceX climbed 7.8%, Meta increased 0.24%, Broadcom rose 0.8%, Tesla was up 2.98%, SK Hynix increased 4.11%, Micron Technology rose 3.31%, AMD was up 2.25%, ASML increased 2.83%, Intel rose 2.01%, Cisco increased 0.67%, Oracle was up 1.55%, Dell Technologies (Class C) rose 7.81%, and ARM increased 2.78%.

  • ZEC Surpasses $1300

    Market data shows that ZEC has surpassed $1300, currently priced at $1315.68, with a 24-hour increase of 14.89%. Due to significant market fluctuations, please ensure proper risk management.

  • OpenAI to Launch on Google Cloud: Cutting-Edge Models like GPT-6 Astra and Codex Code Intelligence Available on Google Cloud

    On October 21, the two companies announced that in the coming weeks, OpenAI will offer its cutting-edge AI models and Codex code intelligence services through Google Cloud. This move deepens the collaboration between these two competitors and highlights how major cloud service providers are becoming important distribution channels for top AI models. According to a corporate blog announcement, this partnership will integrate OpenAI's latest models, including GPT-6 Astra, into Google Cloud's Model Garden. Customers will be able to purchase these models on the Google Cloud Marketplace and settle using their existing cloud service procurement credits. OpenAI aims to promote its models to a broader range of enterprise customers.

  • Zelensky: Willing to Reach Peace Agreement While Retaining Control of At Least 75% of Territory

    On October 21, Ukrainian President Zelensky stated in an interview that Ukraine could reach a peace agreement while retaining control of at least 75% of its territory. When asked by the host whether he would be willing to accept a peace agreement that would freeze the situation as it is, with Ukraine still holding 75% or more of its land, Zelensky responded affirmatively, stating, "Now we must freeze (the front lines), this is a practical way to end this war." (CCTV News)

Daily Must-Read

Popular Activities

RaveDAO at Terra Solis by Tomorrowland: A Female-Led Techno Night Where Web3 Culture Converges

RaveDAO at Terra Solis by Tomorrowland: A Female-Led Techno Night Where Web3 Culture Converges

April 30 - April 30
Dubai

Popular Tags

Cointime
News
Contents
RSS
Company