Mexican Cartels Leveraging Cryptocurrencies for Fentanyl Production, US Treasury Reports

The US Treasury’s Financial Crimes and Enforcement Network (FinCEN) has revealed that Mexican cartels are using cryptocurrencies to acquire materials needed for fentanyl production. This alarming trend comes as the United States faces an unprecedented opioid crisis, according to a June 20 advisory from FinCEN.

US Treasury Raises Alarm Over Crypto-Fueled Drug Trafficking Amid Opioid Crisis

FinCEN’s latest advisory highlights that transnational criminal organizations (TCOs) are increasingly turning to cryptocurrencies to buy equipment and precursor chemicals from suppliers in the People’s Republic of China (PRC). These purchases include items such as pill presses, die molds, and other manufacturing tools, facilitated by well-known digital tokens.

“Mexico-based TCOs are increasingly purchasing fentanyl precursor chemicals and manufacturing equipment from PRC-based suppliers in virtual currency, including bitcoin, ether, monero, and tether, among others,” the advisory states. “Virtual currency payments are often sent to persons affiliated with PRC-based suppliers or secondary money transmitters with hosted wallets at virtual asset service providers.”

Staggering Overdose Statistics Highlight Crisis

Data from Johns Hopkins University and the Centers for Disease Control (CDC) indicate that over one million Americans have died from overdoses since the late 1990s, with annual deaths recently exceeding 100,000. A survey from May revealed that about one-third of Americans know someone who has died from a drug overdose.

Blockchain analytics firm Elliptic found that 90% of China-based companies supplying fentanyl precursors accept digital asset payments. Cryptocurrency transactions linked to these companies have surged by 450% year over year.

Legislative Response to Illicit Digital Asset Activity

The rise of cryptocurrency in the global fentanyl trade has caught the attention of U.S. lawmakers. Senator Elizabeth Warren (D-MA), a long-time advocate for stringent digital asset regulations, and Senator Bill Cassidy (R-LA) addressed the issue in a May 2024 letter to the National Drug Control Policy. They highlighted the significant role cryptocurrencies play in manufacturing and trafficking fentanyl and laundering the proceeds of these activities.

Despite China banning fentanyl exports in 2019 under U.S. pressure, illegal trafficking persists. The U.S. sanctioned eight Chinese businesses last October for selling and distributing precursor chemicals.

The future of blockchain-based organizations in the context of their involvement in the global drug trade remains uncertain.