US authorities have seized another $5,5 million from a drug cartel. Why is this important?

Last year, federal prosecutors in the Eastern District of Wisconsin filed a lawsuit to confiscate more than $5,5 million in USDT. According to authorities, this money was earned through large-scale international drug trafficking. GetBlock AML Research reveals a complex scheme for laundering cryptocurrency obtained from the sale of narcotic substances.

These crypto assets were stored in different wallets. They were traced thanks to an investigation by the Drug Enforcement Administration (DEA), which used undercover agents, informants, and special tools to analyze the blockchain.

The complaint, filed on November 20, 2024, describes in detail how a professional money laundering network for cartels is organized. It showed that such networks combine:

• cash transportation,
• traditional bank transfers,
• fast cryptocurrency transactions.

All this is done to disguise the origin of criminal money.

How the scheme worked

The scheme replicated a proven cartel money laundering method. Cryptocurrency was a key element:

• Cash from cocaine sales in the US was collected by special intermediaries.
• The money was then quickly converted into various cryptocurrencies.
• The assets were transferred to an international account in a cryptocurrency service (account No. 7382) managed by a member of the cartel network.
• More than $15 million in cryptocurrency passed through this account, indicating that it was used as a “channel” to mask the origin of the money.

Visualization: TRM Labs

Scheme for laundering cryptocurrency obtained from drug trafficking

To make tracking more difficult, the funds were moved between different blockchain networks (TRON, Ethereum) and then through a chain of anonymous wallets. Ultimately, the money was collected at two TRON addresses, which the US Department of Justice recognized as proceeds from drug trafficking and confiscated.

On-chain tracking

DEA agents traced the money’s path:

• from street dealers,
• through an international exchange,
• then through a chain of wallets,
• and finally to addresses where the money was “stored” before being laundered.

Recently, the US Treasury Department (OFAC) imposed sanctions against the Mexican cartel Cartel del Noreste (CDN), which may be linked to synthetic drug manufacturers and accepts cryptocurrency as payment.

How the investigation was conducted

The Drug Enforcement Administration used different approaches to study criminals:

• traditional (undercover agents, sting operations, investigation of shell companies, analysis of banking operations),
• and modern (tracking blockchain transactions).

For example, one front company associated with this network carried out more than $22 million in suspicious transactions in less than a year. As a result, authorities were able to confiscate more than $5,5 million USDT.

Why it matters

The investigation revealed that stablecoins(USDT) can play a huge role in money laundering. Cartels use cash, cross-chain transfers, anonymous wallets, and dubious exchanges. All of this is combined into a single system where money is quickly “chased” to cover its tracks.

For law enforcement, this is an example of how combining traditional methods with blockchain analysis can help dismantle complex money laundering schemes. Although authorities did not specify whether any foreign participants in the scheme were arrested, the case dealt a serious blow to the cartel network.

Red flags for compliance

This investigation raised “red flags” for crypto companies:

• very fast transfers,
• no long-term balances in accounts,
• large amounts in anonymous wallets.

Thanks to blockchain analytics, companies can identify such signs and block risky customers.