An official statement states that the Office of Foreign Assets Control (OFAC – Office of Foreign Assets Control) sanctioned Wuhan Shuokang Biological Technology Co., Ltd (武汉硕康生物科技有限公司) (WSBT) and Yao Huatao (姚华涛) (Yao), pursuant to Executive Order (EO) 14059, for participating or attempting to participate in activities or transactions that have contributed substantially to the international proliferation of illicit drugs or their means of productionor present a significant risk of contributing substantially to it.
Yao, a citizen of the People’s Republic of China, is the sole owner of the chemical company WSBTbased in the People’s Republic of China, an entity responsible for the sale of fentanyl precursor chemicals, and, As its CEO, he oversees the company’s operations. OFAC also designated WSBT for being owned, controlled, or directed by Yao, or having acted or purported to act for or on behalf of Yao, directly or indirectly.
OFAC also sanctioned three other PRC citizens for their association with WSBT.. Wu Yaqin (吴雅琴) (Wu) and Wu Yonghao (吴永昊) (Yonghao), sales representatives for Yao’s WSBT company, not only did they negotiate and facilitate the sale of fentanyl precursor chemicals on behalf of WSBT, but Wu also provided information on efficient preparation methods for synthesizing illicit fentanyl. Wang Hongfei (王洪飞) (Wang), a WSBT contributor, owns a cryptocurrency wallet that has been used to receive bitcoin payments for illicit drug transactions on behalf of WSBT.
Chainalysis briefly reviewed the details of these sanctions and how Bitcoin played a role in the relevant transactions.
Who were accused and sanctioned?
Among the entities sanctioned are two Chinese chemical companies: Wuhan Shuokang Biological Technology (WSBT) and Suzhou Xiaoli Pharmatech (SXPC). Four Chinese nationals associated with WSBT were also charged and punished:
- Yao Huatao
- wu yaqin
- wu yonghao
- wang hong fei
Wang Hongfei’s OFAC SDN List Entry Includes a Bitcoin Address Under His Controlwhich was used to accept funds for fentanyl precursor chemicals sold by WSBT.
These companies are accused of selling fentanyl precursor chemicals to middlemen in Latin Americawho then sell them to drug cartels such as the notorious Sinaloa Cartel, based in Mexico. Some of these middlemen and other cartel associates have been indicted by the Justice Department as part of this operation. One of these intermediaries is the Guatemalan Ana Gabriela Rubio Zea, who was also sanctioned.
bitcoin paper
Both WSBT and SXPC have accepted Bitcoin for the sale of fentanyl precursor chemicals. WSBT member Wang Hongfei controlled at least one Bitcoin address used for this activity, which was included in his list entry. OFAC SDN: 3PKiHs4GY4rFg8dpppNVPXGPqMX6K2cBML.
This address is a deposit address hosted by a major cryptocurrency exchange. Since it was activated in December 2021, it has received approximately $366,000 worth of Bitcoin., both from other major exchanges and the now-defunct Hydra darknet marketplace. The following chart from Chainalysis Reactor illustrates some of these transactions:
Source: Chainalysis.com
Analyzes of Hongfei’s Bitcoin address, its activity, and the activity of other associated addresses provide opportunities to better understand the cryptographic nexus between Mexican drug cartels and their chemical suppliers in China.
Oversight of Cryptocurrency-Based Fentanyl Sales
“Imports of fentanyl into the United States continue to fuel the opioid crisis, which has caused untold damage. The police action on April 14 is an important step to curb these drug-based activities“, they detail in the statement.
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