Fentanyl and Crypto, US Treasury Sanctions Wallets

The United States Treasury's Office of Foreign Assets Control (OFAC) has recently sanctioned 17 wallets connected to the fentanyl trade. These wallets received small but consistent deposits of BTC, ETH, and TRON, and they are believed to be controlled by a network of people producing and selling fentanyl. They are mostly based in China, though 3 Canadians were named. These wallets were hosted on a centralized exchange, though the OFAC did not provide details (1). Analysis from Chainalysis estimated that these wallets contained roughly $3.8 million (2).

Of course, this isn't a new problem. A report from Elliptic found that:

• most of the precursor chemicals for making fentanyl are produced and China
• 90% of these producers prefer payments in crypto
• and total payment to these companies is roughly $30 million (3)

The US government is trying to crack down on the fentanyl trade. Biden claimed in a White House fact sheet that his administration will “expand its efforts to disrupt the illicit financial activities that fund these criminals by increasing accountability measures, including financial sanctions” (4). Since this statement, nearly 2 dozen entities have been added to the OFAC sanction list, effectively seizing their assets.

Now here's the question. Centralized exchanges are needed to offramp international crypto payments, so which major CEXs are involved? The OFAC press release refused to name which ones. I'd put my money on Binance. If so, do you think it's a matter of lack of oversight or do you think they knew what was going on?

Sources:

1. https://ofac.treasury.gov/recent-actions/20231003
2. https://www.chainalysis.com/blog/ofac-sanctions-china-fentanyl-october-2023/
3. https://www.elliptic.co/blog/chinese-businesses-fueling-the-fentanyl-epidemic-receive-millions-in-cryptocurrency-payments
4. https://www.whitehouse.gov/briefing-room/statements-releases/2023/04/11/fact-sheet-biden-harris-administration-announces-strengthened-approach-to-crack-down-on-illicit-fentanyl-supply-chains/