The U.S. Treasury sanctioned an Ethereum wallet linked to a Mexican cartel’s drug trade and money laundering activities.
The U.S. Treasury Department has intensified its crackdown on cryptocurrency transactions related to illicit activities. Its Office of Foreign Assets Control (OFAC) recently added an Ethereum wallet to its sanctions list, highlighting its connection to the Mexican narcotics trade.
Ethereum Wallet and Its Suspicious Connections
The Ethereum address, now under the Treasury’s scanner, reportedly belongs to Mario Alberto Jimenez Castro, often referred to as “Kastor”. This 34-year-old Mexican individual has affiliations with the infamous Sinaloa cartel. Although the wallet presently holds a mere 0.017 ETH (valued at approximately $27), it has historically seen transactions involving stablecoins, primarily Tether (USDT) and USD Coin (USDC), amounting to tens of thousands of dollars.
Two globally recognized crypto exchanges, Coinbase and Binance, frequently appear in the wallet’s transaction history. For instance, in October 2022, a significant transfer of 143,965 USDT made its way to Binance from this account. It’s worth noting that both Coinbase and Binance faced lawsuits from the Securities and Exchange Commission (SEC) earlier in June.
Crypto and the Drug Trade
Jimenez Castro’s involvement doesn’t end with mere cryptocurrency transactions. As per the State Department, he operates as a “money launderer” and heads an enterprise that capitalizes on digital currencies to transfer fentanyl proceeds across the U.S.-Mexico border. Notably, major American cities like New York City, Boston, Denver, Nashville, Omaha, and Salt Lake City have been identified as source locations.
Starting from August 2022, Jimenez Castro assigned individuals the task of collecting funds from traffickers in the U.S. These funds were then deposited into cryptocurrency wallets, which were under the control of senior members of his organization.
Prominent U.S. politicians have not been silent on the issue. Elizabeth Warren, known for her skepticism about cryptocurrencies, has frequently pointed out the potential misuse of digital currencies in the drug trade. As early as 2019, the White House had issued statements highlighting the primary role of cryptocurrencies, especially Bitcoin and Ethereum, in funding fentanyl trafficking.
Growing Concerns and Implications for Crypto Users
Jimenez Castro’s Ethereum address is not an isolated case. There’s a growing catalog of crypto addresses sanctioned by the government due to their ties to criminal operations. Some of these belong to the North Korean Lazarus Group, while others are associated with crypto “mixers” like Tornado Cash. These mixers, known for enhancing transactional privacy, are a favorite among money launderers.
It’s crucial to understand that while these sanctioned addresses remain operational, any interactions with them are deemed illegal. Crypto exchanges that unwittingly or knowingly engage with these blacklisted addresses might find themselves in hot waters with the authorities.