Research conducted by TRM Labs reveals that the growth rate of crypto-denominated fentanyl sales has slowed down in 2023.
The first three quarters of the year saw an increase of just under 60% in these sales, a sharp decline from the 155% average growth rate recorded since 2019.
According to a study by TRM Labs, the growth of fentanyl sales denominated in cryptocurrency has slowed significantly in 2023. The research, spanning over 100 online vendors of fentanyl and its precursors, highlights a growth decrease to just under 60% for the first three quarters of 2023.
The study indicates a potential link between this slowdown and the aggressive measures taken by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC).
OFAC has sanctioned 82 individuals and entities associated with fentanyl production and distribution in 2023 alone. This year’s figures represent an increase from previous ones, with only five and seven designations in 2019 and 2020, respectively.
The sanctions have targeted major players in the industry, including a China-based network involved in the manufacture and distribution of fentanyl precursors.
In early October, OFAC sanctioned entities associated with the Sinaloa Cartel, a major drug trafficking organization. As a result of U.S. pressure, the Sinaloa Cartel declared that it would halt its fentanyl production activities. Furthermore, the sanctions impacted several Mexican nationals and a major Chinese precursor manufacturer, Wuhan Shuokang Biological Technology Co., Ltd.
TRM’s analysis reveals a correlation between these major sanctions and a decline in online fentanyl sales involving cryptocurrency. Notably, sales volumes dropped significantly in April and May, coinciding with the sanctions, and saw another plunge in October following an unprecedented designation of 28 individuals and entities.
While it’s challenging to attribute the decrease in crypto-related fentanyl sales solely to OFAC’s actions, these sanctions undoubtedly disrupt supply chains and increase risks for those engaging with targeted manufacturers. Despite the primarily China-based entities being less affected due to limited cooperation from Beijing with U.S. law enforcement, international buyers face heightened scrutiny from U.S. authorities.
However, the decrease in sales does not necessarily indicate a demand reduction. This suggests that new vendors will emerge to fill the gap left by those sanctioned. However, these new players will face increased pressure from U.S. and international law enforcement agencies.