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

Today, 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 DOJ also charged several individuals associated with this operation, following an investigation by the DEA.?

Among the entities sanctioned today 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.

These companies stand accused of selling fentanyl precursor chemicals to LatAm-based brokers, who then sell them to drug cartels like the notorious Sinaloa Cartel based in Mexico. One such broker charged & sanctioned today is Guatemalan national Ana Gabriela Rubio Zea.

WSBT & SXPC accepted Bitcoin for the sale of fentanyl precursor chemicals. WSBT associate Wang Hongfei, sanctioned today, controlled at least one BTC address used for this activity, which was included in his OFAC SDN list entry. That address is 3PKiHs4GY4rFg8dpppNVPXGPqMX6K2cBML.?

3PKi… is a deposit address hosted by a large cryptocurrency exchange. Since becoming active in Dec 2021, it has received $366K in BTC, both from other mainstream exchanges and from the now-defunct darknet market Hydra. Check out the Chainalysis Reactor graph below.

The import of fentanyl into the United States fuels the ongoing opioids crisis that has done untold harm to the country. Today’s law enforcement action is an important step in stamping out this activity. We commend the DEA, DOJ, and OFAC for their work.

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

We look forward to sharing more research and analysis on this case and on the role of cryptocurrency in fentanyl trafficking more generally in the coming months.?

In the meantime, download our 2023 Crypto Crime Report for more data, research, and case studies on the illicit use of cryptocurrency and how law enforcement can fight against it.

Read more from OFAC on the case and from DOJ.