El Mencho’s Killing Sparks Violence Across Mexico, Regulators Highlight Cartel Crypto Use

One of the world’s most wanted drug lords is dead. Nemesio Rubén Oseguera Cervantes, known as “El Mencho,” was killed on Sunday. His death triggered a wave of violence across several Mexican states.

Beyond the security impact, attention is also turning to the cartel’s financial operations. In recent years, regulators and researchers have documented how Mexican criminal networks have incorporated cryptocurrency into their operations.

Who was El Mencho?

El Mencho was among Mexico’s most wanted fugitives and the leader of the Jalisco New Generation (CJNG) cartel. According to the US Department of State, the CJNG was formed in 2009. It has since evolved into one of the most violent drug cartels in Mexico.

“It has been assessed to have the highest cocaine, heroin, and methamphetamine trafficking capacity in Mexico, and over the past few years, includes the trafficking of fentanyl into the United States,” the text reads. 

On February 20, 2025, the United States officially designated the cartel as a Foreign Terrorist Organization pursuant to Section 219 of the Immigration and Nationality Act.

In addition, the US State Department had offered a $15 million reward for information leading to the capture or conviction of El Mencho. He was killed on Sunday during a military operation.

Following his death, unrest spread across parts of the country. According to the BBC, at least 20 states experienced disturbances as cartel members blocked roads and torched vehicles and businesses.

While the immediate fallout played out in the streets, past data shows that CJNG’s impact has extended beyond territorial control.

Over the past years, investigators have tracked the cartel’s increasingly sophisticated financial infrastructure. This includes its use of digital assets to move and launder funds across borders.

Crypto and Cartel Finance

Cryptocurrencies such as Bitcoin (BTC) and Tether (USDT) are not inherently illicit. They are widely used for legitimate investment, payments, and financial innovation. 

However, regulatory and law enforcement agencies have identified instances in which these digital assets were used in transactions linked to illegal activities. 

As early as 2020, Reuters reported that US and Mexican authorities observed an increasing use of Bitcoin among major drug trafficking groups, including the CJNG and the Sinaloa Cartel, for laundering money.

In 2024, the US Treasury’s Financial Crimes Enforcement Network (FinCEN) stated that Mexico-based transnational criminal organizations were using virtual currencies, including Bitcoin, Ethereum, Monero, and Tether, to purchase fentanyl precursor chemicals and equipment from suppliers in China.

A March 2025 report by Chainalysis found that suspected China-based chemical traders received more than $37.8 million in cryptocurrency between 2018 and 2023. Major Mexican cartels, including the CJNG, were identified as buyers of these precursors used to manufacture synthetic opioids.

“Blockchain analysis reveals that precursor chemical suppliers advertise directly on darknet markets and messaging apps, accepting digital assets in exchange for chemicals shipped to Mexico. Once paid, crypto funds are laundered through complex transaction patterns including peel chains, layering, and cross-chain swaps, and often cashed out through Chinese exchanges or international mules,” TRM Labs revealed.

In August 2025, FinCEN also highlighted that the CJNG, the Sinaloa Cartel, the Gulf Cartel, and other Mexico-based transnational criminal organizations were using Chinese money laundering networks (CMLNs) to launder illicit proceeds.

Notably, Chainalysis reported that CMLNs now play a dominant role in cryptocurrency-related money laundering. In 2025, these networks accounted for approximately 20% of known cryptocurrency money laundering activity.

While the activity has scaled, regulatory focus has also intensified. According to the US Attorney’s Office for the Southern District of New York, Paul Campo, a former DEA official, and Robert Sensi were indicted for conspiring to provide material support to CJNG.

“As part of the scheme, CAMPO and SENSI agreed to launder approximately $12,000,000 of CJNG narcotics proceeds; laundered approximately $750,000 by converting cash into cryptocurrency; and provided a payment for approximately 220 kilograms of cocaine on the understanding that the payment would trigger the distribution and sale of the narcotics worth approximately $5,000,000, for which CAMPO and SENSI would (i) receive directly a portion of the narcotics proceeds as profit; and (ii) receive a further commission upon the laundering of the balance of the narcotics proceeds,” the press release said.

Thus, El Mencho’s death marks a significant moment in Mexico’s fight against organized crime. Yet the financial systems supporting major cartels remain complex, cross-border, and technologically adaptive, extending far beyond any single individual.