On May 31, United States Committee on Banking, Housing, and Urban Affairs held a hearing titled "Countering China: Advancing U.S. National Security, Economic Security, and Foreign Policy." During the event, senator Elizabeth Warren cited the report from research firm Elliptic, which found that more than ninety Chinese chemical manufacturers produce fentanyl precursors that are mostly sold to Mexican drug cartels through cryptocurrency transactions before the drug gets to the US.
Read also: China sells fentanyl compounds for crypto
According to Elliptic, Chinese chemical manufacturers have received at least $27 million worth of cryptocurrency, mainly Bitcoin and USDT, which is a sufficient amount of money to produce fentanyl with a total street value of $54 million.
"My team helps lead the international virtual assets contact group, working to define the rules of the road for international financial systems in the regulation of digital assets and countering their use in money laundering. By leveraging this international forum and building consensus around model laws and best practices, we increase the costs for actors to reject these norms," Elizabeth Rosenberg, assistant secretary for terrorist financing and financial crimes at the US Treasury Department, said in her hearing testimony.
Rosenberg, like Warren, is concerned about "a mode that some of these precursor manufacturers and illicit drug organizations have used – the receipt of Bitcoin payments in wallets, cryptocurrency wallets."
"The reason why they would find this appealing is the same reason that other financial criminals would find it appealing, which is to say there's an element of pseudonymity that they seek," Rosenberg added.
Warren believes her bill, the Digital Asset Anti-Money Laundering Act, first introduced in 2022, which would require identity verification of customers of digital financial services as well as a collection of relevant transaction data, can prevent criminal organizations from leveraging cryptocurrency for money laundering.
According to the bill summary provided by the official website of the US Congress, the act "directs specified federal financial agencies to establish rules regarding digital assets. The Financial Crimes Enforcement Network (FinCEN) must establish a rule classifying digital asset wallet providers, cryptocurrency miners, validators, and others as money service businesses. In addition, FinCEN must require U.S. persons to report cryptocurrency transactions through foreign accounts of over $10,000. FinCEN must also require digital asset kiosk owners and administrators to submit an update every three months on the physical addresses of the kiosks."
Meanwhile, Warren mentioned in a tweet her other bill aiming "to ensure bad actors in bankruptcy cases are held accountable," referring to "a bankruptcy law loophole" that grants immunity to the billionaire Sackler family, owners of OxyContin maker PurduePharma, against any claims about the pharmacy’s role in the opioid crisis.
The company has been heavily criticized for its aggressive marketing campaign, attempting to manipulate doctors' prescribing habits by creating the illusion of opioid addiction being overblown and labeling it as a product "to start with and to stay with" in its advertisements.
OxyContin was also mentioned in "Pandora's Lab: Seven Stories of Science Gone Wrong", the 2017 book by Paul A. Offit, which describes how legal opioid-based medications became "a major cause of death in the US" after the launch of OxyContin. Meanwhile, the Drug Enforcement Administration (DEA) claims fentanyl is 100 times more potent than morphine and is currently the leading cause of death for people between the ages of 18 and 45 in the United States.
Although the criticism of Warren from the cryptocurrency community was predictable, the response from Ben Armstrong aka BitBoy Crypto, a popular cryptocurrency blogger, was particularly notable.
"I said it before and I’ll say it again, Elizabeth Warren is one of the most corrupt politicians to ever step foot in Washington. Her entire career is literally a warpath of half-truths and covered-up lies, and it’s time we put this to bed once and for all," Armstrong tweeted on May 31, adding a link to his new 20-minute YouTube video in which he shares his personal investigation into the politician's career with the audience.
Although many Twitter users support BitBoy Crypto’s opinion, some of them reminded the blogger of his career. Armstrong, while facing a lawsuit for promoting the collapsed crypto exchange FTX, has been heavily involved in pump-and-dump memecoin projects. His mysterious alias Ben.eth, a pseudonymous issuer of the memecoins BEN, PSYOP, and LOYAL, has already been threatened with a class action by the civil rights law firm Loevy and Loevy for a rug pull fraud.