The U.S. Treasury's Office of Foreign Assets Control (OFAC) on May 21 imposed sanctions on 12 individuals tied to the Sinaloa Cartel, marking the first large-scale action targeting a drug cartel's crypto-enabled money laundering network. The sanctions specifically zero in on the cartel's 'Los Chapitos' faction, which investigators say has shifted from traditional banking to stablecoins and decentralized exchange infrastructure.
Key figures and the money chain
OFAC identified Armando de Jesus Ojeda Aviles as the group's primary coordinator for tech-driven fund transfers. He allegedly collected street-level cash across the U.S. via couriers and middlemen, then converted the cash into cryptocurrency using DeFi tools. Jesus Alonso Aispuro Felix handled large-scale crypto transfers, while Rodrigo Alarcon Palomares orchestrated cash collection nationwide. In April 2024, a Colorado grand jury indicted Palomares on three money laundering counts tied to these operations.
Chainalysis tracks the flow
Blockchain analytics firm Chainalysis assisted OFAC by tracing on-chain movements and incorporating the sanctioned wallet addresses into its monitoring systems. In a public statement on X, Chainalysis said the Sinaloa Cartel 'set a new precedent by using stablecoins to enable cross-border financial flows,' confirming that the network converted fentanyl profits into cryptocurrency to move funds between the U.S. and Mexico. 'These addresses are now tagged in our databases, and we will continue surveillance,' the firm added.
Cash-to-stablecoin laundering cycle
OFAC detailed a three-step laundering method: physical cash collected from U.S. cities is funneled to intermediaries; the cash is swiftly converted into stablecoins (predominantly USDT and USDC); the stablecoins pass through decentralized exchanges and ultimately land in centralized platforms—effectively masking their criminal origin. The U.S. Treasury has flagged stablecoins and decentralized platforms as emerging money-laundering tools, stressing that such crypto ecosystem behaviors pose a growing financial threat.