While bitcoin frauds and scams are becoming more frequent, governments are losing their patience against the bad actors behind these activities. Rrecently the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) couldn’t bear the illegal trafficking of narcotics. Therefore, OFAC decided to go all-out against 3 Chinese nationals. After alleging them for not complying with the law code, OFAC even sanctioned crypto addresses of the drug traffickers.
According to OFAC, Xiaobing Yan, Fujing Zheng and Guanghua Zheng have violated drug smuggling and money laundering laws. While labeling them as narcotics traffickers due to the Foreign Narcotics Kingpin Designation Act, OFAC went ahead to freeze all properties of the alleged violators. Moreover, OFAC has also blacklisted them for any international travel.
The U.S. Department of Treasury had revealed several aspects related to the bad actors in a press release. Among three alleged, Fujing Zheng and his father Guanghua Zheng made a team to create and distribute controlled substances. Similar charges were also imposed on Yen, who worked separately.
Zhengs are particularly associated with the Zheng Drug Trafficking Organization that has been involved with the manufacturing and distribution of various controlled substances. These substances include furanyl fentanyl, carfentanil, acetyl fentanyl, etc. Besides, Qinsheng Pharmaceutical Co. Ltd. was also suggested to have links with Zheng as Fujing is said to be affiliated with the company, however his relation is unclear at the moment.
The U.S. Treasury also elaborated on the methodology of the Zheng family for making money. It is believed that initially bitcoin was used for payments by Zhengs. And later, with the help of Hong Kong and Chinese bank accounts, bitcoin was cashed out while dodging the reporting restrictions and currency bypassing laws.
On the other hand, Yen is said to be involved with synthetic opioids, cannabinoids and cathinone. He was accused of providing the aforementioned substances directly to U.S. customers in different cities of the United States.
Although there isn’t a binding relationship between the two parties, however Yen is said to avoid the prosecution by timely altering the chemical contents of synthetic analogues. He did so in accordance with the legislation and law of the United States and China to somehow evade legal proceedings and criminal charges.
Zheng also manufactured analogues of drugs without compromising on the intended effects of the drug. Later, he was able to use mail carriers to enter drugs in the U.S. And with the help of online sales and marketing strategies, he was able to successfully sell products to hundreds of citizens.
For breaching several rules and regulations related to the narcotics trafficking, the treasury has taken steps to sanction the Chinese traffickers with the help of the drug Kingpin Act. Released in 1999, the act bestows authority to sanction foreign narcotics traffickers and their organizations operating worldwide.
Following the act, the treasury has added a few bitcoin and litecoin addresses to Specially Designated Nationals (SDN) List. People are advised to refrain interact with the ones added to the SDN List. The assets of entities in the list are also taken over and blocked by the government.
Since 2000, there have been more than 2200 entries, subjected to the Kingpin Act for trafficking. To the traffickers, penalties of $1.1 million per violation and up to 30 years of imprisonment can be imposed. The monetary penalty can add up to several millions of dollars depending on the crime.
Apart from volatile and unpredictable nature, the negative use of bitcoin has been causing problems to various governments for bitcoin adoption . Among several downsides, the use of bitcoin for money laundering is very troublesome for many regulatory bodies and governments.
With time, not only the acceptance of bitcoin, the techniques for scamming and defrauding have improved as well. With a plethora of unpleasing use cases of bitcoin, the world’s first cryptocurrency is up against severe criticism from the crypto adversaries. While regulations and strict inspection are preferable to prevent trafficking on a larger scale, there is no hard rule to ensure or guarantee that these incidents can be prevented in the future.