U.S. Treasury and DOJ Take Action Against Chinese Fentanyl Trafficking Network
On October 3, 2023, the U.S. Treasury’s Office of Foreign Assets Control (OFAC) designated 28 individuals and entities associated with the international proliferation of illicit drugs, including a China-based network trafficking fentanyl, methamphetamine, and MDMA precursors, as well as xylazine and other “nitazenes” which are highly potent drugs that are often mixed with illicit fentanyl.
Additionally, OFAC identified 17 cryptocurrency addresses associated with 6 of the 28 designated individuals and entities as follows: Shen Xingbiao, Wang Jiantong, Wang Mingming, Xia Fengbing, Zhang Wei, and Canada-based company Valerian Labs INC.
For another sanctioned entity – Hanhong Pharmaceutical Technology Co., Ltd. – TRM Labs identified additional addresses associated with the company. Hanhong Pharmaceutical has advertised the sale of fentanyl precursors to Mexican customers, with some of its sales representatives communicating with Mexico-based individuals linked to the Sinaloa Cartel and to the trafficking of illicit fentanyl.
In addition to going after the illicit drug precursor manufacturers, OFAC also sanctioned an entity engaged in the sale of punches and dies for tablet presses with pharmaceutical imprints which provided pill dies for counterfeit oxycodone M30 tablets.
In total, the volume received by the cryptocurrency addresses associated with the sanctioned individuals and entities amounts to over USD 3.7 million, having been amassed between October 2021 and October 2023.
In addition to the OFAC actions, the U.S Department of Justice announced the unsealing of eight indictments in the Middle and Southern Districts of Florida which charged several China-based companies and their employees with crimes relating to fentanyl and methamphetamine production, distribution or synthetic opioids, and sales resulting from precursor chemicals.
These indictments represent the second set of prosecutions that charge China-based chemical manufacturing companies and Chinese nationals for trafficking fentanyl precursors into the United States. Although no cryptocurrency addresses were included in the indictments, TRM Labs has identified addresses associated with two of the indicted entities – Lihe Pharmaceutical Technology and Xiamen Wonderful Biotechnology, whose sales volumes amount to over USD $130,000 generated between May and September 2023.
This week’s sanctions and indictments are the result of interagency cooperation and collaboration by the United States Attorney’s Offices for the Southern and Middle Districts of Florida, DEA Miami Field Division, HSI Miami, USPIS-Miami, IRS-CI Miami, and FBI Miami Field Offices. The U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) provided assistance with the indictments brought in both districts.
In addition, the investigations highlight the task force model in which local, state and federal law enforcement work closely together to investigate cases. According to the DOJ, the indictments are a result of Organized Crime Drug Enforcement Task Forces (OCDETF) investigations and members of the South Florida High Intensity Drug Trafficking Area (HIDTA) Task Force were instrumental in these cases.
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