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Chinese Firms Used Crypto Payments to Run Fentanyl Network, U.S. Claims in Charges

The U.S. Department of Justice charged eight companies with illegal drug production, distribution and sales of precursor chemicals, saying they used cryptocurrency to move money.

By Jesse Hamilton|Edited by Kevin Reynolds

Updated Oct 3, 2023, 7:44 p.m. Published Oct 3, 2023, 7:44 p.m.

U.S. authorities cracked down on another ring of fentanyl suppliers they say are tied to Chinese companies and using cryptocurrency to move money. (Photo illustration by Jesse Hamilton)

The U.S. Department of Justice (DOJ) targeted several Chinese businesses and their employees Tuesday in the latest round of charges tied to production and trafficking of fentanyl – a network that depended on cryptocurrency payments, according to authorities.

Alongside the criminal case, the U.S. Treasury's Office of Foreign Assets Control (OFAC) also sanctioned the list of Chinese nationals on Tuesday, identifying 16 associated crypto wallets in the action.

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“We have identified and blocked over a dozen virtual currency wallets associated with these actors,” said Treasury Deputy Secretary Wally Adeyemo, in a press conference. “The blocked wallets, which received millions of USD funds over hundreds of deposits, illustrate the scope and scale of the operation targeted today.”

The DOJ cracked down on the Florida network of 28 businesses and individuals it said was involved in producing fentanyl and methamphetamine and the sale of precursor chemicals used to make the illegal drugs.

“These companies tend to use cryptocurrency transactions to conceal their identities and the location and movement of their funds,” according to a DOJ statement.

The connection between crypto and the fentanyl trade has drawn heavy attention, including from Sen. Elizabeth Warren (D-Mass.), who has called for new laws to shut down that pipeline of digital payments.

Regulations Department of Justice Indictment Fentanyl China Sanctions Wallets OFAC Treasury

Jesse Hamilton

Jesse Hamilton is CoinDesk's deputy managing editor on the Global Policy and Regulation team, based in Washington, D.C. Before joining CoinDesk in 2022, he worked for more than a decade covering Wall Street regulation at Bloomberg News and Businessweek, writing about the early whisperings among federal agencies trying to decide what to do about crypto. He’s won several national honors in his reporting career, including from his time as a war correspondent in Iraq and as a police reporter for newspapers. Jesse is a graduate of Western Washington University, where he studied journalism and history. He has no crypto holdings.