WASHINGTON โ U.S. Senators Bill Cassidy, MD (R-LA), and Elizabeth Warren (D-MA) demanded an update from the White House Office of National Drug Control Policy (ONDCP) and the Drug Enforcement Administration (DEA). ) on actions to repress the exploitation of cryptocurrencies by drug traffickers to grow their businesses and launder money.
โThe number of opioid overdose deaths has increased dramatically in recent years, almost fourfold, from approximately 21,000 in 2010 to more than 81,800 deaths in 2022. This sharp increase is attributed to the rapid proliferation of illicitly produced fentanyl. โFentanyl, a synthetic opioid approved pharmaceutically to treat severe pain, has been illegally manufactured and distributed through underground drug markets in the form of counterfeit tablets, which resemble prescription medications or other illicit drugs that are commonly misused.โ the senators wrote.
โCryptocurrency has played an increasingly prominent role in the global fentanyl trade over the past decade, both in terms of facilitating the manufacturing and trafficking of fentanyl and laundering criminal proceeds from drug cartels, and has been recognized as a threat by the administrations of both parties. โ the senators continued.
Read the full letter here or below:
Dear Director Gupta and Administrator Milgram:
We are writing to express our current concerns about the role of cryptocurrencies in the international fentanyl trafficking trade and to request an update on the Biden administration's actions to end drug traffickers' exploitation of cryptocurrencies to grow their profits. businesses and launder their ill-gotten gains. .
The number of opioid overdose deaths has increased dramatically in recent years, nearly quadrupling, from approximately 21,000 in 2010 to more than 81,800 deaths in 2022. This sharp increase is attributed to the rapid proliferation of illicitly produced fentanyl. Fentanyl, a synthetic opioid approved pharmaceutically to treat severe pain, has been illegally manufactured and distributed through underground drug markets in the form of counterfeit tablets, which resemble prescription medications or other illicit drugs that are commonly misused. Overdose deaths related specifically to fentanyl and its analogs increased more than 56% between 2019 and 2020 and have surpassed suicide, cancer, and car accidents as the leading cause of death among people ages 18 to 45 in the United States Joined.
Fentanyl manufacturing involves a global network that often requires the purchase of precursors (the chemicals used in illegal drug manufacturing) that typically originate outside the United States. The Drug Enforcement Administration (DEA) has identified China as the main producer of fentanyl precursors. Mexico-based drug cartels then use the precursors to manufacture their own fentanyl to sell in the United States. Chinese financial companies have also been found to play a major role in laundering funds for Mexican cartels.
Cryptocurrency has played an increasingly prominent role in the global fentanyl trade over the past decade, both in terms of facilitating the manufacturing and trafficking of fentanyl and laundering the criminal proceeds of drug cartels, and has been recognized as a threat by the administrations of both parties. In 2020, the Trump administration's Office of National Drug Control Policy noted that cryptocurrencies have helped "create[e] a favorable risk-reward structure that drug traffickers are now adopting to an even greater degree than ever before.โ In September 2022, the Biden Administration announced new measures to strengthen anti-money laundering law enforcement in the crypto ecosystem in recognition that โdigital assets have facilitated the rise of ransomware cybercriminals; sale of narcotics and money laundering for drug trafficking organizations; and the financing of activities of rogue regimes.โ A 2021 Government Accountability Office (GAO) study found that cryptocurrencies "have been instrumental in the increase in drug sales in the US, specifically fentanyl and other synthetic opioids."
Although many crypto transactions are recorded on the public blockchain, "illicit actors involved in the sale of fentanyl and fentanyl precursor chemicals are often attracted to cryptocurrencies due to their near-instantaneous, cross-border, and pseudonymous characteristics," which they make detection by law. make its application more difficult. This is particularly true of so-called โdecentralizedโ crypto exchanges, which โoperate without a traditional central entity or administrator.โ According to a 2022 GAO report that examined the role of cryptocurrencies in drug and human trafficking, traffickers' use of decentralized platforms creates "barriers to identifying illicit actors because no person or legal entity behind the platform collects and retains information about user identities.
A May 2023 investigation into 90 China-based companies that supply fentanyl precursors found that 90 percent accepted cryptocurrency payments. The same investigation found that the cryptocurrency wallets used by these companies collectively received nearly $30 million in crypto payments, enough to purchase the precursors needed to produce a staggering $54 billion worth of fentanyl pills. As the researchers note, this "amount of fentanyl would technically be enough to cause 8.6 billion people to suffer a fatal overdose of the drug." The number of crypto transactions with these China-based companies has skyrocketed by more than 450 percent year over year.
In response to the growing use of cryptocurrencies in illicit drug trafficking, the DEA, the Department of the Treasury, the Department of Justice (DOJ), and other federal agencies have implemented initiatives to combat the use of cryptocurrencies in drug trafficking. These actions have had an immediate impact. In April 2023, Treasury sanctioned several individuals and companies in China for supplying fentanyl precursors to drug cartels in Mexico for the production of fentanyl destined for the U.S. In September 2023, Treasury sanctioned several members of the Sinaloa Cartel for laundering cartel profits from illegal fentanyl sales. in the US through crypto wallets held by cartel leaders. In October 2023, the Department of Justice announced the indictment of eight โChina-based companies,โ including several that โoperate[d] a cryptocurrency wallet that accepts payments forโฆsales of fentanyl precursors and opioid additivesโ โ โwith crimes related to the production of fentanyl and methamphetamine, distribution of synthetic opioids, and resulting sales of precursor chemicals.โ Based on these cases, the Department of Justice announced a new fentanyl strike force that will โidentify additional disruption opportunities for key money laundering nodes in international fentanyl trafficking networks, especially those that rely heavily on of cryptocurrencies.โ
While these developments are welcome, we seek additional information on the measures your offices are taking to disrupt the use of cryptocurrencies by illicit drug actors. To that end, we request answers to the following questions by June 14, 2024:
- What are your offices' current assessments of the role cryptocurrencies play with respect to illegal drug trafficking in general and opioids in particular?
- What specific actions has the Administration taken regarding the role of cryptocurrencies in fentanyl trafficking since the President issued Executive Order 14059 in December 2021?
- What new initiatives will the Administration launch during the next year?
- What metrics are you currently using to measure success in combating the illicit use of cryptocurrency in fentanyl trafficking? What do these measurements reveal?
- What challenges do your offices face in their efforts to prevent the use of cryptocurrency in illegal drug transactions?
- What legal limits are you currently facing? Do you have any specific recommendations for Congress to address this issue?
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