Laundering Drug Trafficking Funds with Crypto... Will Mexican Cartels Finally Collapse?

▲ Mexico, Bitcoin (BTC), money laundering / ChatGPT-generated image

Following reports of the death of Mexico’s notorious drug lord “El Mencho,” details have emerged revealing that the cartel he led carried out massive money laundering and illicit transactions using virtual assets.

According to cryptocurrency-focused media outlet BeInCrypto on February 25 (local time), Nemesio Ruben Oseguera Cervantes, leader of the Jalisco New Generation Cartel (CJNG), was killed during a military operation on Sunday. After the death of Cervantes, widely known by his alias El Mencho, violent incidents erupted across Mexico, with cartel members blocking roads and setting vehicles and shops on fire. The U.S. Department of State has classified CJNG as one of the world’s most dangerous drug trafficking organizations and had offered a $15 million reward for information leading to El Mencho’s capture.

Although El Mencho’s death has dealt a blow to the cartel’s physical operations, authorities warn that the sophisticated financial network it established remains intact. Investigators have revealed that CJNG actively used virtual assets to move and launder funds across borders. Findings indicate the group used Bitcoin (BTC) and Tether (USDT) to purchase precursor chemicals and equipment from Chinese suppliers for the production of fentanyl.

The U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has pointed out that Mexican criminal organizations, including CJNG and the Sinaloa Cartel, continue to conduct illicit transactions using Bitcoin, Ethereum (ETH), and Monero (XMR). According to a March 2025 report by blockchain analytics firm Chainalysis, Chinese chemical vendors received more than $37.8 million in virtual assets between 2018 and 2023, with CJNG identified as one of the primary buyers.

The cartel’s laundering techniques have grown increasingly sophisticated. Blockchain analytics firm TRM Labs disclosed that the group launders funds through complex transaction patterns such as peel chains, layering, and cross-chain swaps before cashing out via Chinese money laundering networks. Notably, as of 2025, approximately 20% of all virtual asset laundering activities are reportedly conducted through these Chinese-linked networks. Authorities have also recently indicted former Drug Enforcement Administration (DEA) officials Paul Campo and Robert Sensi on charges of assisting CJNG in laundering money.

While El Mencho’s death may mark a significant milestone in Mexico’s fight against organized crime, the crypto-based criminal financial ecosystem has evolved beyond any single individual. Experts warn that cartels are increasingly bypassing regulatory oversight by conducting direct transactions not only through centralized exchanges but also via darknet platforms and messaging apps. The international community now faces the urgent task of strengthening virtual asset regulations and surveillance systems to cut off cartel funding streams, regardless of the absence of a drug kingpin.

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