red 
On October 3, the US Office of Foreign Assets Control (OFAC) issued narcotics sanctions against 12 entities based in China and 13 individuals “involved in the international proliferation of illicit drugs.” In addition to the latest tags, there were 17 crypto addresses with cryptoassets worth just under $11 million – bringing the total value of crypto assets held by sanctioned drug dealers to $25 million.
Elliptic is happy to report that, given our extensive research on the use of cryptocurrencies in the global fentanyl trade, many of the crypto addresses listed in this enforcement action have already been identified and made available for verification on our block analysis solutions since May of this year.
In addition, we identified four addresses belonging to Hanhong Pharmaceutical Technology Co., Ltd., which is one of the sanctioned entities, but without any cryptoasset addresses listed under the OFAC designation.
Website of Hanhong Pharmaceutical Technology Co., Ltd. – one of the entities sanctioned on October 3 in the latest OFAC designations.
OFAC sanctions continue to target the global fentanyl trade
OFAC’s latest enforcement action coincides with unsealing of eight indictments by the US Department of Justice (DoJ) against China-based companies allegedly involved in the proliferation of fentanyl.
OFAC’s press release stated that a “China-based network responsible for the production and distribution of tons of fentanyl, methamphetamine, and MDMA precursors” was among the targets of the designation.
The newly sanctioned individuals and entities also included those “involved in the global trade in xylazine and nitazenes,” which are known for their potency and are often combined with fentanyl.
Determination of the use of Executive Order no. 14059, signed into law by President Joe Biden in December 2021. The order – titled “Imposing Sanctions on Foreign Persons Involved in Global Illicit Drug Trafficking” – was first used by OFAC to sanction fentanyl dealers in November 2022, including two individuals and one entity which holds $12 million worth of shared cryptoassets.
Along with the latest order, OFAC listed a total of 86 crypto-asset addresses related to illicit narcotics, with combined assets of over $25 million. The digital assets of choice are predominantly Bitcoin, Tether and Ether.
Both this and previous sanctions also targeted die and tablet press manufacturers – shown here on the website of a recently sanctioned manufacturer.
What does on-chain analytics show?
Elliptic’s research team analyzed the latest addresses shared by OFAC in its latest designation. In a manner consistent with our past research, we found that crypto exchanges based in the Greater China region remain attractive withdrawal points for these individuals and entities.
We also found that most of these addresses have both direct and indirect interaction with dark web markets. This is despite many of these dark web vendors outright banning the sale of fentanyl to avoid extensive law enforcement scrutiny.
The interaction between fentanyl dealers and the dark web market is a trend we previously discussed in our “Crypto and the global fentanyl trade” report. This suggests that the ban on fentanyl trade on the dark web is poorly enforced. Furthermore, it suggests that many of these companies may obtain basic materials or chemicals from illegal sources.
You can also read more about the interaction between fentanyl dealers and the dark web market our previous blog.
Elliptic Investigator shows sanctioned individuals and entities (left) interacting with dark web markets (right).
How Elliptic can help
Elliptic has taken immediate action to ensure that the 17 addresses included in the latest tags are available for review and tracking using our holistic, next-generation blockchain analytics technology. This includes reclassifying addresses we previously identified as sanctioned entities.
Users will now be able to ensure that they do not inadvertently process funds originating from – or sent to – addresses included in this flag.
As demonstrated by our existing coverage of many of the addresses sanctioned in OFAC’s most recent update, Elliptic continues to proactively monitor high-risk crime areas. You can Contact us for further information or schedule a demo.
To keep up with the latest crypto crime trends and ensure you’re protected, you can access insights from our global policy and research teams at Elliptic blog.
You can also download our new one “Crypto and the global fentanyl trade” report, which investigates the use of cryptocurrencies throughout the fentanyl supply chain.
