U.S. Treasury Targets Sinaloa Cartel Adding Crypto Address to Sanctions List

On September 26, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned nine individuals, including several Sinaloa Cartel affiliates and fugitives, for their involvement in the operation of the Los Chapitos faction of Mexico’s Sinaloa Cartel. According to OFAC, the Sinaloa Cartel is responsible for “a significant portion of the illicit fentanyl and other deadly drugs trafficked into the United States.”

In April 2023, the U.S. Department of Justice indicted seven of the nine individuals on a range of charges to include fentanyl trafficking, weapons trafficking, and money laundering. The State Department has offered rewards for their capture.

One of those indicted cartel members is Mario Alberto Jimenez Castro (Jimenez Castro) who, according to OFAC, operates a money laundering organization that uses virtual currency and wire transfers, among other methods, to transfer proceeds from illicit fentanyl sales in the United States to Sinaloa Cartel leaders in Mexico. According to Treasury and DOJ, Jimenez Castro has directed U.S.-based couriers to pick up cash in the United States and deposit it into various virtual currency wallets for payment directly to the Chapitos and for reinvestment in fentanyl production.

In addition to adding Jiminez Castro to its Specially Designated Nationals List (SDN), OFAC also added a cryptocurrency address on the Ethereum blockchain, associated with Jimenez Castro, which had received more than USD 740,000 between March 2022 and February 2023. This is the first time that OFAC has identified the use of cryptocurrency by the Mexican cartel. 

While the cartel did not use crypto to buy narcotics, cryptocurrency was used to launder illicit funds in an attempt to obfuscate the movement of monies generated from fentanyl sales.

According to OFAC, the Sinaloa Cartel is responsible for a significant portion of the illicit fentanyl trafficked into the United States, with TRM Labs data collected from nearly 100 individual fentanyl shops worldwide showing that in 2023 there has been a 41% growth in sales in contrast to the same period last year. This figure represents a continuation of the growth trend that has been witnessed over the past four years, being indicative of the opioid crisis currently unfolding in the United States and globally.

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OFAC’s actions are the result of ongoing cross border collaboration with partners, including the Drug Enforcement Administration (DEA) and the Government of Mexico’s La Unidad de Inteligencia Financiera (Mexico’s Financial Intelligence Unit).