Chinese Companies Illegally Selling Fentanyl for Crypto?
Fentanyl, a highly potent synthetic opioid, is a severe public health hazard to the United States and other countries. It’s a sought-after commodity amongst drug cartels, enticing seekers of euphoria and intense highs with its low cost and strong effect.
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The fentanyl crisis in the United States has reached such alarming proportions that it was officially declared a critical state issue, on par with heroin, in 2017. Today, fentanyl overdose stands as the leading cause of death among Americans aged 18 to 45.
China had long been a major source of illicit fentanyl to the US. However, in 2019, the Chinese authorities implemented strict regulations that halted the flow of this dangerous opioid. Despite the export ban, Mexican drug dealers refused to be deterred. They shifted their tactics and began supplying the American market with fentanyl produced from precursor chemicals. These precursors serve as the building blocks for synthesizing complex narcotics and psychotropic substances.
According to a report from Elliptic, over 90 Chinese manufacturers of fentanyl precursors are prepared to ship their goods to the US and Mexico, accepting cryptocurrency as payment. Certain cryptocurrency wallets associated with these illicit suppliers are listed in the sanctions of the US Treasury Department dated April 14, 2023.
Chinese manufacturers are illicitly shipping fentanyl precursors to the US and accepting cryptocurrency as payment. Source: https://www.elliptic.co
Elliptic's researchers uncovered offers from Chinese businesses that included not only precursors to fentanyl, one of which is tightly regulated in many nations yet still unregulated in China, but also precursors to methamphetamine and amphetamine.
Elliptic underscores the seeming indifference of the sellers regarding how these precursors might be used. Some even candidly disclosed the popularity of their merchandise and its potential utilization in fentanyl production. The vendors pointed out that their precursors are sought after by customers from Mexico, who usually pay for their orders in US dollars, USDT stablecoins, or bitcoins. Consequently, 90% of the businesses that the researchers reached out to supplied a crypto wallet address for payment reception.
Cryptoasset exchanges are banned from operating in the country, and overseas exchanges cannot service Chinese residents. Despite this, the majority of the chemical suppliers that accepted crypto were using accounts at exchanges based outside of China – all at three specific exchanges. This may also indicate that these businesses use intermediaries to help them convert cryptocurrency payments to renminbi,
the Elliptic report indicates.
Customers from Mexico are placing orders for fentanyl precursors and settling payments with USDT or BTC. Source: https://www.elliptic.co
Using their proprietary tools, Elliptic has made a startling revelation. The identified wallets associated with the illicit fentanyl trade have received a staggering number of payments, totaling more than $27 million. It is estimated that this quantity of precursor chemicals could yield fentanyl pills with a street value of approximately $54 billion. This figure not only highlights the immense profits reaped by drug cartels but also underscores the potential for causing overdose fatalities among 8.6 billion individuals. To compound the issue further, the volume of these payments has surged by 450% compared to 2022.
Elliptic has notified the exchanges being used by these companies, and have flagged hundreds of crypto addresses in our tools as being linked to this activity. We are monitoring the situation, and will continue our efforts to prevent cryptocurrencies from being exploited by those engaged in this deadly trade,
declares the company.
About Elliptic
Blockchain analytics firm Elliptic Source: https://twitter.com/elliptic
Established in 2013, Elliptic provides solutions in blockchain analytics, with a specific focus on tackling financial crime. Its founders have been involved with crypto assets in regulated financial institutions since 2011, fully understanding the critical role of industry regulation and prevention of illicit activities.
In 2020, Elliptic's groundbreaking approach to technology was recognized at the World Economic Forum.
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