Thursday, November 30, 2023

The United States Treasury’s Office of Foreign Assets Control (OFAC) has issued an amended version of its Specially Designated Nationals (SDN) list, incorporating several suspected fentanyl traffickers based in China along with their associated cryptocurrency addresses. The flagged cryptocurrency addresses are linked to decentralized blockchain platforms including Bitcoin, Ethereum, and Tron.

OFAC Expands Database, Includes Addresses Related to Chinese Fentanyl Network and Adds 17 Cryptocurrency Addresses

In its ongoing efforts to enlarge its repository of cryptocurrency addresses associated with illicit activities, OFAC announced the addition of 17 new addresses on October 3, 2023. These addresses, related to blockchain technologies such as Bitcoin, Ethereum, and Tron as well as other digital assets like Tether (USDT), have been identified as being part of a fentanyl distribution network, primarily headquartered in China but also connected to Canadian entities.

Analytic firm Chainalysis disclosed findings in a report, stating that the sum of $3.8 million in cryptocurrency had been received by these addresses. Various individuals including Bahman Djebelibak, Shen Xianbiao, Wang Jiantong, Zhang Wei, Xia Fengbing, and Wang Mingming, as well as the Canada-based company Valerian Labs, were among those sanctioned by OFAC.

Chainalysis’ investigation revealed that Fengbing managed the cryptocurrency addresses on behalf of an entity named Jiangsu Bangdeya New Material Technology. The company’s Reactor software also discovered that the sanctioned addresses were linked to several well-known cryptocurrency exchanges. Moreover, a significant fraction of the funds were found to have originated from darknet marketplaces. This development is a continuation of OFAC’s earlier sanctions involving Bitcoin addresses purportedly linked to ransomware activities connected to Iran.

Simultaneously, the U.S. Department of Justice (DOJ) has publicized eight separate indictments against the implicated network, accusing them of dealing in fentanyl, methamphetamines, and precursor chemicals. These legal actions aim at both companies and individuals who have been transparently promoting the sale of illegal chemicals while employing methods to elude legal scrutiny. U.S. Attorney General Merrick Garland commented, “We are aware that the global fentanyl supply chain, culminating in the loss of American lives, frequently initiates with chemical firms based in China.”

We invite readers to share their perspectives and insights on OFAC’s recent action of flagging 17 cryptocurrency addresses in the comments section below.

Frequently Asked Questions (FAQs) about OFAC Sanctions on Cryptocurrency Addresses

What is the OFAC and what does it do?

The Office of Foreign Assets Control (OFAC) is a department within the United States Treasury responsible for enforcing economic sanctions against foreign countries and entities involved in illicit activities.

What is the Specially Designated Nationals (SDN) list?

The Specially Designated Nationals (SDN) list is a record maintained by the OFAC that identifies individuals, companies, and other entities subject to U.S. economic sanctions.

What new additions were made to the SDN list on October 3, 2023?

OFAC added 17 new cryptocurrency addresses associated with suspected Chinese fentanyl traffickers. These addresses are linked to decentralized blockchain technologies such as Bitcoin, Ethereum, and Tron.

What role does Chainalysis play in this context?

Chainalysis is an analytic firm that published a report on these addresses, revealing that they collectively received $3.8 million in cryptocurrency. The firm’s findings also showed links to mainstream cryptocurrency exchanges and the darknet.

What actions did the U.S. Department of Justice (DOJ) take?

The U.S. Department of Justice announced eight separate indictments against a network implicated in the distribution of fentanyl, methamphetamines, and precursor chemicals. These legal actions target both individuals and companies promoting the sale of illegal substances.

What cryptocurrencies are primarily involved in these new sanctions?

The primary cryptocurrencies involved in these sanctions are Bitcoin, Ethereum, and Tron, along with the digital asset Tether (USDT).

What does this mean for mainstream cryptocurrency exchanges?

The flagged addresses had ties to several mainstream cryptocurrency exchanges, indicating that these platforms may need to enhance their due diligence measures to prevent engagement in sanctioned activities.

How significant is the amount of cryptocurrency received by these flagged addresses?

The 17 flagged cryptocurrency addresses have collectively received $3.8 million worth of digital assets, indicating a substantial level of activity.

Who are the key individuals and entities sanctioned by OFAC in this case?

Among those sanctioned are individuals such as Bahman Djebelibak, Shen Xianbiao, Wang Jiantong, Zhang Wei, Xia Fengbing, and Wang Mingming, as well as the Canada-based company Valerian Labs.

What are the broader implications of these sanctions for the cryptocurrency market?

The sanctions serve as a strong message to the cryptocurrency market about the necessity for robust compliance mechanisms to prevent being implicated in illicit activities, especially drug trafficking.

More about OFAC Sanctions on Cryptocurrency Addresses


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JamesTech42 October 7, 2023 - 3:24 am

Wow, so now OFAC is diving into crypto. this just shows how mainstream crypto has become, but also, how it can be misused. Time for better regulation?

Jess_Analyst October 7, 2023 - 4:43 am

17 addresses is a small fraction but sets a precedent. With Chainalysis tech getting better, it might become very risky for wrongdoers in the crypto space. Good riddance.

WorriedInvestor October 7, 2023 - 9:10 am

Starting to question the anonymity of blockchain. if OFAC can identify and sanction addresses, is anyone really safe? Makes ya think.

LegalMind October 7, 2023 - 9:25 am

The DOJ is also getting involved? Seems like they’re throwing the book at these folks. it’s a coordinated effort, and I’m here for it.

SaraEconWatch October 7, 2023 - 12:36 pm

Honestly, $3.8 million is a lot of money. Chainalysis is doing some solid work uncovering this. These traffickers should be held accountable, and fast.

TradeExpert October 7, 2023 - 3:03 pm

OFAC sanctions are no joke. they’ve got broad powers and if they’re going after crypto addresses, it spells changes for how exchanges and wallets operate.

CryptoGuru October 7, 2023 - 6:07 pm

This is big news and could be a game changer. If the govt starts cracking down on crypto addresses more regularly, what’s it mean for the average user? Need to be more careful now.


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