Chinese chemical producers are accepting cryptocurrency as payment for fentanyl ingredients they sell to drug organizations worldwide.
Researchers at crypto analytics platform Elliptic have found over 90 Chinese chemical companies that sold fentanyl precursor chemicals and advertised their products on the open web, 90% of which offered to accept payment in cryptocurrencies like Bitcoin (BTC) and Tether (USDT).
“Many of these businesses were also willing to supply fentanyl itself, despite this being banned in China since 2019,” the company said in a recent report.
The report revealed that most of the Chinese labs providing fentanyl ingredients used accounts at “three specific exchanges” based outside of China, which were unnamed in the report.
After analyzing the cryptocurrency wallets used by these companies, Elliptic revealed that they have received thousands of payments totaling just over $27 million and that the number of “transactions has increased by 450% year-on-year.”
Elliptic said multiple suppliers have admitted that they have shipped fentanyl precursors and the drug itself to Mexico, where most of the fentanyl that flows into the United States comes from.
“Most fentanyl trafficked into the United States is manufactured using precursors imported from Chinese suppliers,” the blockchain analytics firm added.
Similarly, a separate report from blockchain analysis firm Chainalaysis revealed that cryptocurrency addresses associated with suspected China-based fentanyl precursor sellers have received more than $37.8 million worth of cryptocurrency since 2018.
The report detailed that Latin America-based crypto users were most involved in Fentanyl transactions, estimating that they have sent nearly $3.6 million worth of cryptocurrency to China-based chemical shops.
US Regulators Call Out Role of Crypto in Fentanyl Trades
Last month, US Senator Elizabeth Warren called out cryptocurrency’s role in fentanyl drug transactions and pushed for her bill to combat money laundering during a congressional hearing.
The Massachusetts Democrat, and longstanding crypto critic, said her bill, the Digital Asset Anti-Money Laundering Act, will close loopholes “in our anti-money laundering rules and cuts off drugs suppliers and cartels from using crypto to fuel their illegal business.”
“Crypto is helping fund the fentanyl trade. And we have the power to shut that down. It’s time,” Warren added during a Senate Banking Committee hearing.
Fentanyl is a synthetic opioid pain reliever that is similar to morphine but is up to 100 times more potent. It is prescribed by doctors to treat severe pain such as that experienced by cancer patients.
However, fentanyl is also made and used illegally as a recreational drug because of its powerful effects on the body.
It has long been one of the most dangerous wares of the underworld cryptocurrency economy.
In 2021, the US recorded more than 106,000 drug overdose deaths, of which synthetic opioids were involved in around 70,600, according to research from the National Institutes of Health.
In recent years, most dark-web markets have begun instituting bans on the drug due to both the harm the substance brings to customers and the accompanying law enforcement attention.