The Biden administration is increasing efforts to trace cryptocurrency payments used by Mexican drug cartels to purchase fentanyl ingredients from Chinese chemical companies. This is part of a renewed campaign to combat the multibillion-dollar fentanyl trade, which causes thousands of American deaths each year. The use of digital currency among fentanyl traffickers has surged, with transactions for fentanyl ingredients increasing by 450% from last year through April. To catch up with these developments, federal agents are implementing digital-first tactics to disrupt the fentanyl trade.
The Drug Enforcement Agency (DEA) is investing in crypto-tracing software and identifying sophisticated money launderers working for the cartels. The IRS is utilizing its tech-savvy agents to trace payments on dark web forums, while a Department of Homeland Security investigations unit is leading a team of forensic specialists to analyze digital clues near the Mexican border. The DHS has recently ramped up surveillance efforts in tracking the cartels’ finances and supply routes.
The activities of two major Mexican cartels, Sinaloa and Jalisco New Generation Cartel (CJNG), have come under scrutiny. These cartels are responsible for a significant portion of the fentanyl on US streets, with the Sinaloa Cartel utilizing sophisticated cryptocurrency operations to finance its fentanyl business. The ability of cryptocurrency to facilitate instantaneous money transfers across a decentralized banking system has enhanced the cartels’ smuggling capabilities. This poses a challenge for law enforcement, as the speed at which criminals operate makes it difficult to keep up.
While cash remains the preferred currency for local operations, the expanded use of digital currency in the drug trade has made traditional law enforcement methods obsolete. Digital currency eliminates the need for hand-to-hand transactions, reducing opportunities for surveillance by federal agents. However, it also leaves a trail that investigators can follow. Cryptocurrency addresses have been discovered at stash houses in Arizona, and federal agents have monitored cartel-connected crypto accounts to track money laundering activities.
Fentanyl is primarily sourced from China, with ingredients pressed into pills or packed in powder form and smuggled into the US by Mexican drug cartels. The Biden administration’s intensified focus on tracing cryptocurrency payments aims to disrupt this process and combat the fentanyl trade. Although notable busts have occurred recently, officials caution that there is still much work to be done, and the impact of these efforts may not be realized for several months.