OFAC Sanctions Sinaloa Cartel’s Crypto Laundering Network Used to Move Fentanyl Proceeds

TLDR:

• OFAC sanctioned over a dozen individuals tied to the Sinaloa Cartel’s crypto laundering operation in May 2026.
• Los Chapitos used stablecoins and decentralized exchanges to convert fentanyl cash proceeds into digital assets.
• Chainalysis traced on-chain fund flows and labeled all sanctioned crypto addresses within its blockchain analytics suite.
• A Colorado grand jury indicted cartel associate Rodrigo Alarcon Palomares in April 2024 for laundering drug proceeds via crypto.

The U.S. Treasury’s Office of Foreign Assets Control sanctioned a Sinaloa Cartel money laundering network. The network converted fentanyl cash proceeds into cryptocurrency to move funds across the U.S.-Mexico border.

More than a dozen individuals and entities were designated. The operation centered on the Los Chapitos faction and its crypto-based financial pipeline.

This action targets a growing trend of cartels using digital assets to bypass traditional banking systems.

Los Chapitos Faction’s Cash-to-Crypto Operation

OFAC identified Armando de Jesus Ojeda Aviles as the primary money launderer for the Los Chapitos faction. He took over after his predecessor, Mario Alberto Jimenez Castro, was sanctioned in September 2023 for similar crypto laundering activity. Ojeda Aviles built a logistics network using U.S.-based couriers to collect bulk cash from street-level drug sales.

Two key figures operated within the network alongside Ojeda Aviles. Jesus Alonso Aispuro Felix served as the chief money broker, managing high-volume transfers through designated crypto addresses.

Rodrigo Alarcon Palomares handled physical cash pickups across the United States, facilitating the transition from cash to digital assets.

Alarcon Palomares faced legal consequences before this designation. A federal grand jury in Colorado indicted him in April 2024 on three counts of laundering drug proceeds through cryptocurrency. His role was central to connecting street-level cash collection with the broader digital conversion pipeline.

Chainalysis shared details about the network’s activity in a post on X, formerly Twitter. The blockchain analytics firm stated: “Today, OFAC sanctioned a Sinaloa Cartel money laundering network that used crypto to move fentanyl proceeds across the US-Mexico border.” This confirmed the cartel’s shift toward using stablecoins as a primary transfer tool.

On-Chain Mechanics Behind the Laundering Cycle

The laundering cycle followed a structured pattern from street cash to digital assets. Couriers collected fentanyl proceeds in the U.S. and handed them off to cartel brokers. Those brokers converted the cash into stablecoins through bulk transactions.

Once converted, the funds moved through decentralized exchanges, swapping between stablecoins before reaching centralized platforms.

Chainalysis Reactor traced the on-chain flow, showing wallets linked to Ojeda Aviles forwarding funds toward exchanges likely used for cashing out. This method allowed the cartel to simplify cross-border transfers without using banks.

Stablecoins have become a common tool for transnational criminal networks because of their price stability and speed.

The Treasury’s designations are part of a broader counter-narcotics strategy aimed at cutting off financial pipelines used to fund cartel operations. Sanctioning specific crypto-laundering cells reduces the cartel’s operational capacity.

Chainalysis confirmed it labeled all relevant cryptocurrency addresses in its product suite. The firm said it will continue monitoring on-chain activity linked to the sanctioned network going forward.

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