US Treasury Blackballs Bitcoin Addresses of Chinese Drug Kingpins

By CCN Markets: The U.S. Treasury Department blackballed the bitcoin addresses of Chinese drug kingpins operating international drug-trafficking rings. It's part of a move to curb the opioid epidemic ravaging the United States.

The Treasury’s Office of Foreign Assets Control (OFAC) and the Financial Crimes Enforcement Network (FinCEN) banned a total of 12 bitcoin and Litecoin addresses to financially squeeze the drug networks.

Treasury warns banks about crypto-drug schemes

In a statement, OFAC identified three Chinese nationals as "significant" narcotics traffickers under the Treasury's Kingpin Act.

  • Fujing Zheng.
  • Guanghua Zheng.
  • Xiaobing Yan.
The U.S. Treasury Department blackballed the bitcoin and Litecoin addresses of Chinese drug kingpins. (Source: Treasury Dept)

FinCEN director Kenneth Blanco also issued an advisory to financial institutions alerting them to financial schemes related to the trafficking of fentanyl and other synthetic opioids.

“We are making the financial sector aware of tactics and typologies behind illicit schemes to launder the proceeds of these fatal drug sales, including transactions using digital currency and foreign bank accounts.

Financial institutions must be on alert to red flags and other indicators of the complex schemes fentanyl traffickers are employing so they can report relevant information with law enforcement.”

Bitcoin is the reigning champ among crypto criminals

Since 2000, more than 2,200 individuals and entities had been identified pursuant to the Kingpin Act for their roles in international drug trafficking. In recent years, the U.S. government has been forced to quickly learn about cryptocurrencies as more criminals turn to them to finance their activities.

As CCN reported, bitcoin is used in 95% of crypto crimes. Moreover, many recent drug busts involving fentanyl purchases were uncovered through blockchain analysis because buyers paid for them with bitcoin.

Blockchain forensics analysis has been very useful for the U.S. Drug Enforcement Agency and the Department of Homeland Security in their efforts to crack down on illegal drug activity.

“There is the ability to tie some of those cryptocurrency transactions either to the pharmacies in China or to the services that people are using to distribute fentanyl,” said Jonathan Levin, co-founder of Chainalysis. “Homeland Security and the DEA have actually become really good at apprehending those people.”

Dark Web drug dealers laundered $3.2 million in bitcoin

In April 2019, the Manhattan District Attorney's Office indicted three men for allegedly laundering $2.3 million in bitcoin by using debit cards pre-loaded with BTC.

The trio was also charged with operating bogus storefronts on the Dark Web that sold illegal drugs, including counterfeit Xanax tablets, the DA's Office announced in a statement.

Craig Wright: Bitcoin is only useful for criminals

Self-proclaimed bitcoin inventor Craig Wright has recently railed against bitcoin, saying it has devolved into a vehicle for money-laundering and drug trafficking.

As a result of this obscene perversion of "his invention," Wright predicts that "bitcoin will disappear." Why? Because "because crime will always fail," he warned.

Last modified (UTC): August 23, 2019 4:52 AM

Share
Samantha Chang @Samantha_Chang

Samantha Chang is a New York City-based financial editor who writes about crypto and business at . She is a law school grad and an alum of the University of Pennsylvania. You can reach her on Twitter at or email her at schang121@juno.com.

Show comments

News Tip?

tips (at) ccn.com