The White House issued advisories on illegal drug purchases in the US yesterday, specifically addressing the use of cryptocurrencies to purchase fentanyl, a controlled drug.
The two advisories were targeted at online payment platforms as well and financial firms. These advisories stated that cryptocurrencies, especially those that were easy to convert to fiat including Bitcoin Cash, Bitcoin, Monero, and Ethereum, could be used for drug purchases either on the Clearnet (the publicly-accessibly part of the Internet), Dark web, and Deep Web. In the advisory, cryptocurrencies are referred to as CVCs or convertible crypto coins, digital currency that is easy to liquidate into fiat such as the US dollar.
How Crypto Is Used For Illegal Drug Purchase
The main drug mentioned in the advisories is fentanyl, which is a Schedule II controlled substance. It illicitly enters the US from China or Mexico. The DEA claims that fentanyl is about 100 times more potent than morphine.
The White House advisory states that domestic manufacturers of illegal drugs, consumers, and their dealers are using online payment platforms and crypto coins to buy chemicals used in making the drug. They are also purchasing fully synthesized narcotics coming in from China.
The process to obtain fentanyl is fairly simple. In this process, individuals interested in purchasing Fentanyl find dealers online or on the Dark web and pay for the drug using cryptocurrencies. CVC mixers, which obfuscate sender and recipient addresses by mixing several payments into a single platform, are often used to hide identities. But law enforcement officials have been fairly successful in cracking down on illicit trades and sites. One of the examples given in the advisory is the takedown of the AlphaBay market in July 2017 by US officials.
Tracking Crypto Purchases
The report also details various methods for payment services institutions to track and discover payments for such transactions. Among the information elements considered important to agencies are wallet addresses, information transaction details and mobile device number (IMEI numbers). These elements leave an information trail for agencies to pursue criminal elements.
This advisory was issued in conjunction with other agencies as part of a broader effort to end the opioid epidemic in the US. Besides issuing this advisory, the US Treasury recently announced that it had blacklisted three Chinese citizens for money laundering and their involvement in illegal drug sales. The Treasury Department claimed that the three criminals were using crypto to launder their money and published a list of their cryptocurrency addresses.