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On February 28, the US Treasury’s Office of Foreign Assets Control (OFAC) updated its list of Specially Designated Nationals and Blocked Persons (SDN List) to include a crypto address controlled by an entity involved in opioid trafficking.
Hebei Tuna Trading Co. Ltd. is a Chinese company that was initially sanctioned in December 2021 for involvement in the import and export of fentanyl precursors. Hebei Atun was designated by Executive Order 14059, “Imposing Sanctions on Foreign Persons Involved in Global Illicit Drug Trafficking,” a US measure designed to counter the trafficking of deadly narcotics such as fentanyl.
An update to Hebei Atuna’s entry on the SDN list now includes a Bitcoin address controlled by the company, which Elliptic’s research shows has a balance of approximately $1.1 million. This is now the fourth entity sanctioned by the US under EO 14059 where there was a connection to crypto-asset activities.
Image from the Hebei Atun website, which has since become unavailable.
In November 2022, OFAC sanctioned under EO 14059 a network of individuals and entities in the United Kingdom and the Netherlands involved in the dark web trafficking of fentanyl. The three websites that OFAC cited as a network used to facilitate fentanyl trafficking – Real Arc, Smokey’s Chem Site and Research Group Nederland – used different crypto addresses to conduct their activities.
OFAC has also previously targeted fentanyl traffickers who rely on the crypto-asset under another authority, the Foreign Narcotics Designation Act (“Kingpin Act”). In August 2019, OFAC sanctioned three Chinese nationals—Xiaobing Yan, Fujing Zheng, and Guanghua Zheng—under the Kingpin Act for their involvement in fentanyl trafficking and included their crypto addresses on the SDN list.
As the chart below shows, crypto wallets controlled by entities and individuals targeted under EO 14059 and the Kingpin Act received more than $14 million.
These actions show that the US government is increasingly focused on targeting fentanyl trafficking networks that use cryptocurrencies to facilitate their activities.
It is critical that crypto companies and financial institutions avoid dealing with addresses controlled by OFAC-sanctioned fentanyl traffickers.
Using a wallet verification solution like Elliptic Lens and a transaction verification solution like Elliptic Navigator, exchanges and financial institutions can identify and block funds associated with these sanctioned entities.
Using our holistic screening capabilities, your compliance team can also identify exposures to these and other sanctioned entities even when funds are transferred through cross-chain and cross-asset services. This ensures you have the insights needed to ensure your business can detect and prevent exposure to sanctions risks.
Contact us to learn more about how Elliptic’s blockchain analytics solutions can enable you to ensure compliance with OFAC’s sanctions requirements.
