US Treasury Blacklists Bitcoin (BTC), Litecoin (LTC) Addresses Under Kingpin Act

Cryptocurrency addresses linked to three Chinese individuals were blacklisted, to limit crypto-based financing for drug trafficking.

The US Treasury Office of Foreign Assets Control (OFAC) blacklisted Bitcoin (BTC) and Litecoin (LTC) addresses for three Chinese individuals, based on the Kingpin Act for crime financing. The three individuals were large-scale suppliers of opioids and used crypto assets to transfer funds outside the financial system.

The drug traffickers, Xiaobing Yan, Fujing Zheng, and Guanghua Zheng, faced sanctions after coordinated actions from OFAC, FinCen and US law enforcement agencies.

“The Chinese kingpins that OFAC designated today run an international drug trafficking operation that manufactures and sells lethal narcotics, directly contributing to the crisis of opioid addiction, overdoses, and death in the United States.  Zheng and Yan have shipped hundreds of packages of synthetic opioids to the U.S., targeting customers through online advertising and sales, and using commercial mail carriers to smuggle their drugs into the United States,” said Sigal Mandelker, Under Secretary for Terrorism and Financial Intelligence. 

“OFAC and FinCEN’s coordinated action with U.S. law enforcement leverages Treasury’s authorities to confront the deadly synthetic opioid crisis plaguing America.”

However, the BTC contained within the addresses is no longer “censorship-free”, as the coins have a tainted origin. Third parties like exchanges may be aware of the blacklisting and refuse to liquidate any coins originating from those addresses.

The list contains no “whale wallets”, but some of the addresses processed as much as 100 BTC.

Xiaobing Yan:

Fujing Zheng:

Guanghua Zheng:

The three Chinese nationals also had any other US-based assets frozen, and their identities and electronic aliases revealed.

The blacklisted addresses were announced at a time when US authorities are becoming more skeptical of the usage of digital assets for crime. US Secretary of State Mike Pompeo hinted at dangers related to terrorism financing, though without mentioning a specific coin.

BTC remains one of the preferred ways to transfer funds for dark market deals and illegal activities.

Reading now