When cops caught Joaquín Guzmán López, the son of big-time Mexican cartel leader “El Chapo,” it made people look closer at how the cartel de Sinaloa does business. This includes how they use cryptocurrency to move drug proceeds around.
According to cartel news from an NBC report on July 26, U.S. law enforcement caught Joaquín Guzman Lopez and Ismael “El Mayo” Zambada García, key figures in the Sinaloa Cartel. It’s considered the most dangerous cartel and a major player in the global drug trade.
U.S. officials identify the Culiacan cartel as the top cartel in Mexico and leading drug supplier to the United States. They also highlight that fentanyl causes more deaths among Americans aged 18 to 45 than any other factor, fueling the opioid epidemic.
The arrests didn’t involve cryptocurrency, but several reports, including those from the U.S. Drug Enforcement Administration (DEA), have pointed out the cartel’s use of digital currencies to assist fentanyl trafficking and distribution.
How Crypto Might Help Law Enforcement
Criminal organizations like the Chapitos, sons use cryptocurrencies more often to launder money and carry out illegal importation and transactions. They value crypto’s supposed anonymity.
For example, they have used digital currencies to bypass traditional financial systems and move money across borders with less chance of getting caught.
According to a 2023 study by Chainalysis, drug cartels were responsible for over $1 billion in crypto transactions annually, a stark indication of how deeply embedded digital currencies have become in their operations.
Even though cryptocurrencies pose challenges when used for narcotics charges and other illegal activities, their technology’s built-in openness also gives law enforcement a chance to fight back. The public record of blockchain lets law enforcement track transactions. This can help follow the movement of dirty money.
This ability to trace is both good and bad: it gives criminals a way to hide where money comes from, but it also leaves a path for the authorities to follow.
Police departments are using blockchain analysis to grasp and fight against the abuse of digital currencies in illegal operations. These systems can spot trends and follow money helping to break down intricate money networks used by groups such as the Sinaloa cartel founders.
Regulators, Law Enforcement and Community to Work Together
Regulators, cryptocurrency exchanges, and law enforcement like the Justice Department should join forces to ensure blockchain technology brings more benefits than drawbacks. During a Senate hearing in April, Deputy Treasury Secretary Adewale Adeyemo called for better rules to prevent criminals from misusing cryptocurrencies.
The crypto community and regulators are teaming up to beef up protections against the wrong use of digital currencies for things like obtaining Chinese precursor chemicals for synthetic opioid production. Stronger Know Your Customer (KYC) and Anti-Money Laundering (AML) rules play a key role in stopping illegal activities.
The Chapitos’ use of digital money shows how hard it is to stop criminals from using these new currencies. But it also shows how these tools could help catch bad guys involved in cartel murders and cartel executions carried out by sicarios and Ninis providing violent armed security.
The ongoing drug crisis and more deaths from fentanyl mean we need to act fast. Using digital money to keep communities safe could help fight the Continuing Criminal Enterprise of cartels.
