Tl;dr: Coinbase recently led a proactive investigation to identify crypto wallets connected to the online sale of fentanyl precursors. By leveraging blockchain analytics and working closely with law enforcement partners, our team helped uncover networks operating across multiple countries. This case reinforces a core truth: crypto’s transparency can help stop crime in its tracks.
This post is part of a weekly Tuesday series at Coinbase about the latest consumer protection and security measures for crypto owners.
At Coinbase, we’re on a mission to help update the financial system to make it safer and more secure. While only 0.14% of blockchain transactions are used for illicit activity, and cash remains the preferred medium for illegal transactions, crypto security is always a top priority. Coinbase maintains a robust compliance program, which includes Know Your Customer (KYC) checks, sanctions screenings, suspicious activity reporting, and strong law enforcement partnerships to detect and prevent illicit activity on our platform.
At Coinbase, we rely on the inherent transparency of blockchain to monitor, investigate, and escalate activity that threatens public safety.
According to the CDC, overdose remains the leading cause of death for Americans aged 18-44. Fentanyl in particular is driving a devastating crisis. Much of the fentanyl entering the United States is manufactured using precursor chemicals sold online, often by chemical suppliers who accept cryptocurrency payments. This was our way in.
Coinbase’s Special Investigations Team launched a proactive investigation and uncovered a web of actors using crypto wallets to accept payments for fentanyl precursors. This operation was part of our broader strategy to support law enforcement and safeguard our community.
How the Investigation Worked
Our team structured the “sprint” around three core principles: trace, connect, and act.
1. Trace: Following the Money On-Chain
We began by identifying clusters of wallet addresses associated with vendors advertising the sale of fentanyl precursors. Using blockchain analytics tools from our partners at Chainalysis, our team traced over 17,000 crypto transactions over time and across borders.
2. Connect: Linking Wallets to Real-World Activity
Once we collected the data, we moved through systematic target identification and case construction phases.
Even when vendors tried to hide their tracks, the blockchain left a permanent record that allowed us to put the puzzle pieces together.
3. Act: Escalating Intelligence and Protecting Users
Once the network of high-risk wallets was mapped and verified, we escalated findings to trusted law enforcement partners. Coinbase generated and shared intelligence packages with agencies across multiple countries and jurisdictions.
Internally, we also took action on accounts that violated our terms of service or posed a risk to the broader community.
Why This Matters: Crypto Isn’t a Blind Spot, It’s a Beacon
This investigation underscores an important truth: while traditional financial systems often obscure transactions, blockchain reveals them.
Bad actors may think digital assets provide cover, but with the right tools and commitment, that cover disappears. Coinbase is proud to lead the industry in showing how crypto can actually enhance safety and transparency.
Key takeaways:
Blockchain leaves a trail. Crypto transactions are publicly verifiable and traceable by design.
Proactive efforts save lives. We don’t simply react to illicit activity. We work to eliminate threats before they can cause harm.
Cross-industry collaboration is key. Coinbase works directly with analytics organizations and government agencies to disrupt criminal networks and support safer communities.
Protecting People Is Part of Our Mission
At Coinbase, we believe the future of finance is built on trust, transparency, and strong protections for the people who use it. The fentanyl crisis is a global challenge, but we are committed to using every tool at our disposal to help disrupt the systems that fuel it.
This investigation is just one example of how Coinbase uses technology and trust to protect people, not just assets. We’re proud to be setting the standard for responsible crypto stewardship, and we’re just getting started.
Coinbase has acquired Echo, the leading onchain capital raising platform, for approximately $375M. By joining forces, we’re making it easier for companies to raise funds and grow, and giving the community early access to unique investment opportunities.
