DOJ names bitcoin wallet in enforcement action

The Office of Foreign Assets Control (OFAC), a division of the US Treasury Department, has taken aggressive action against five individuals living in the People’s Republic of China (PRC) and in Guatemala. On Friday, OFAC announced sanctions against the five, along with two PRC-based companies. All allegedly played roles in supplying drug cartels with ingredients used to make opioids. Moreover, one of the accused allegedly processed payments through a crypto wallet.

Named in the OFAC designation are Yao Huatao, Wu Yaqin, Wu Yonghao, Wang Hongfei, and Ana Gabriela Rubio Zea. Also listed are Wuhan Shuokang Biological Technology Co., Ltd., and Suzhuo Xiaoli Pharmatech Co., Ltd.

The OFAC announcement charges that PRC national Yao Huatao, who owns Wuhan Shuokang Biological Technology Co. Ltd., oversaw the sale of fentanyl precursors. It alleges that Wu Yaqin and Wu Yonghao acted as sales representatives for the illicit operations. OFAC claims that Ana Gabriela Rubio Zea, a broker based in Guatemala, bought the precursors for the Sinaloa, Mexico-based cartels. OFAC also charges Suzhuo Xiaoli Pharmatech Co. Ltd. with having shipped the precursors to Mexico.

One allegation here is embarrassing for a crypto industry seeking broader acceptance. OFAC alleges that the fifth individual named, Wang Hongfei, owned a cryptocurrency wallet. He allegedly used it to receive bitcoin payments on behalf of the PRC-based firm.

Cryptocurrency wallets are not hard to set up. All too often, criminals misuse them to send and receive payments anonymously.

Supply Chains

OFAC accuses the five people and two entities of having supplied precursor chemicals for the production of fentanyl to the cartels. PRC companies are a primary source of precursors that go into the making of fentanyl drugs. Then, criminals smuggle the drugs across the U.S.-Mexico border in order to sell them on American streets.

Amid the opioid epidemic, stopping the flow of precursor drugs into Mexico has been a priority for U.S. law enforcement.

According to Centers for Disease Control figures, 67 percent, or 71,941, of the 107,375 overdose deaths in the United States in the twelve-month period running through January 2022 involved fentanyl and other synthetic opioids.